Economist Ori Brafman and his psychologist brother Rom explain why “the more there is on the line, the easier it is to get swept into an irrational decision.”
The authors offer an accidental motto that ought to be engraved over every casino in the world, to say nothing of every stock exchange. Adding a page to the small but growing literature of behavioral economics, they examine these irrationalities. It makes sense that egg sales, for example, would be up around Easter and at the beginning of the month, when paychecks had been freshly deposited. It makes less sense that when egg prices drop a little, people buy more of them than they perhaps can eat, but when they rise by the same amount, people cut back on their consumption by two and a half times. “This feeling of dread over a price increase,” write the authors, “is disproportionate to the satisfaction you feel when you get a good deal.” In other words, we seem programmed to expect disappointment and to fight harder to avoid losing a buck than to earn one in the first place, messy matters that carry the reader into the deeper, more complicated recesses of the mind. Also, “we often ignore all evidence that contradicts what we want to believe.” Eureka! The Brafmans’ book probes less deeply into economic behavior than does Dan Ariely’s Predictably Irrational (2008), but it is richer psychologically, a worthy companion to Malcolm Gladwell at his best.
One of those rare books that explains the obvious in ways that are not obvious at all.