Image via WikipediaProfessor Dan Ariley is the Alfred P. Sloan Professor of Behavioral Economics at MIT, where he holds a joint appointment between MIT's Media Laboratory and the Sloan School of Management. He is also a researcher at the Federal Reserve Bank of Boston and a visiting professor at Duke University. Ariely wrote this book while he was a fellow at the Institute for Advance Study at Princeton.presented a talk at Google about his book "Predictably Irrational: The Hidden Forces That Shape Our Decisions." His main thesis refutes the original assumption that humans are "Homo Economus" i.e. rational human beings who always act in their best interest and who always try to maximize their profits. A youtube description of his talk:
In a series of illuminating, often surprising experiments, MIT behavioral economist Dan Ariely refutes the common assumption that we behave in fundamentally rational ways. Blending everyday experience with groundbreaking research, Ariely explains how expectations, emotions, social norms, and other invisible, seemingly illogical forces skew our reasoning abilities. Not only do we make astonishingly simple mistakes every day, but we make the same types of mistakes, Ariely discovers. We consistently overpay, underestimate, and procrastinate. We fail to understand the profound effects of our emotions on what we want, and we overvalue what we already own. Yet these misguided behaviors are neither random nor senseless. They're systematic and predictable—making us predictably irrational.and the video
His work in the area of behavioral finance continues the work started by Amos Nathan Tversky, who was a cognitive and mathmatical psychologists. He worked very closely with Daniel Kahnemann a Noble Prize winning researcher to show conclusively about the hidden biases in the human decision making process. Their findings in the area of behavioral finance question the assumption of human beings acting totally in a rational manner.
The picture that emerges out of these findings portrays us more like "rationalizing beings" rather then "rational beings" or we could say that we use reason and logic as tools to create new knowledge but the process that leads to rational self consistent knowledge is not rational itself.
These findings of human behavior as non-rational are also being supported by the work in the area of Cognitive, Affective and behavioral Neuroscience.
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