Book Review: The Upside of Irrationality

Author tries to get deep inside the minds of his subjects and experiment on their psyches to understand them

Published: Oct 30, 2010 06:26:19 AM IST
Updated: Oct 27, 2010 12:34:17 PM IST
Book Review: The Upside of Irrationality

Ariely’s book may be about behavioural finance, but it is also very personal. Starting with his recovery from serious burn injuries (a magnesium flare exploded next to him and left 70 percent of his body covered with third degree burns) and going on to look at his own experiences and behaviour, he gives the reader insights on why we react in certain ways in certain situations. He tries to get deep inside the minds of his subjects (and even readers) and experiment on their psyches to understand them.

Take the issue of compensation. He says, “It is not a big secret to think that the more money I promise you, the more you will try. But the question is, will you succeed?” Because, surprisingly, higher rewards did not guarantee better results: With one task, about 43 percent of the people got it right when they were given a low bonus, but at a high bonus, only 4 percent got it right. Money is a motivator at certain levels, but can be a source of huge stress, which can easily interfere with performance.

The book’s often rigorous details slow down the pace, but impatient readers can simply skip the experiments and move on to the conclusions. True-blue mystery fans, however, who want to understand how things really work and how the detective reaches his conclusions, will have a great time.

Some people though, are not going to like this book. Like those who get huge bonuses (bankers and CEOs), and online dating sites. And Audi. The author’s rant against the carmaker is very personal, and the focus of a chapter called a “Case for Revenge”, which is a must-read.

Upside… is at times very funny, always free-flowing, and could become one of the best first books on behavioural finance.

The Upside of Irrationality - The Unexpected Benefits of Defying Logic at Work and at Home; by Dan Ariely; HarperCollins; 334 pages; Rs. 399

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(This story appears in the 05 November, 2010 issue of Forbes India. To visit our Archives, click here.)

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