The author presents some new insights that can help one gain a deeper understanding of irrational behavior in daily life. A key concept is that of relativity. Most human decisions are based on comparisons, and different conclusions are arrived at depending on what we choose to compare to.



What if there's nothing available for comparison? People will find an arbitrary "anchor" to compare to. The author demonstrates that people will even use their social security numbers as anchors to determine what they will pay for something. Another example of relativity and anchoring is when the first bread making machine was introduced, people viewed it as too expensive (they had nothing similar to compare it to). The product didn't sell until the same firm introduced a deluxe, higher priced machine. Then the original model started selling (because the original model was now a bargain compared to the deluxe version).



A second major concept is that human decisions made in an aroused, emotional state (caused by desire, fear, or anger) are different from those made in a cold, rational state. Thus, it is to our advantage to stay in a cold, rational state when making important decisions. On the other hand, when selling a product or idea, we will be more successful if we can appropriately arouse the buyer. The author provides examples demonstrating that people are irrationally aroused when offered something for FREE.



In summary, this book is a valuable tool in understanding the irrational nature of human decision making.

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