Is there an upside to irrationality?

Dan Ariely’s The Upside of Irrationality: The Unexpected Benefits of Defying Logic at Work and at Home gives some excellent life lessons by describing his insightful experiments on behavioral economics at MIT and Duke. I recently gave it a re-read and thought I’d share some of my highlights:

On Bonuses:

“To summarize, using money to motivate people can be a double-edged sword. For tasks that require cognitive ability, low to moderate performance-based incentives can help. But when the incentive level is very high, it can command too much attention and thereby distract the person’s mind with thoughts about the reward. This can create stress and ultimately reduce the level of performance.”

On Motivation and Meaning

“What this analysis tells me is that if you take people who love something (after all, the students who took part in this experiment signed up for an experiment to build Legos) and you place them in meaningful working conditions, the joy they derive from the activity is going to be a major driver in dictating their level of effort. However, if you take the same people with the same initial passion and desire and place them in meaningless working conditions, you can very easily kill any internal joy they might derive from the activity… This experiment taught us that sucking the meaning out of work is surprisingly easy. If you’re a manager who really wants to demotivate your employees, destroy their work in front of their eyes. Or, if you want to be a little subtler about it, just ignore them and their efforts. On the other hand, if you want to motivate people working with you and for you, it would be useful to pay attention to them, their effort, and the fruits of their labor... companies really want their workers to produce, they should try to impart a sense of meaning—not just through vision statements but by allowing employees to feel a sense of completion and ensuring that a job well done is acknowledged. At the end of the day, such factors can exert a huge influence on satisfaction and productivity.”

On Ownership and Affection

“One theory was that the cake mixes simplified the process to such an extent that the women did not feel as though the cakes they made were “theirs.” At the time, a psychologist and marketing expert by the name of Ernest Dichter speculated that leaving out some of the ingredients and allowing women to add them to the mix might resolve the issue. This idea became known as the “egg theory.” Sure enough, once Pillsbury left out the dried eggs and required women to add fresh ones, along with milk and oil, to the mix, sales took off.”

“These results imply that investing more effort does, indeed, increase our affection, but only when the effort leads to completion. When the effort is unfruitful, affection for one’s work plummets. (This is also why playing hard to get can be a successful strategy in the game of love. If you put an obstacle in the way of someone you like and they keep on working at it, you’re bound to make that person value you even more. On the other hand, if you drive that person to extremes and persist in rejecting them, don’t count on staying “just friends.”)”

“Sadly, in surrendering our effort in these activities, we gain relaxation, but we may actually give up a lot of deep enjoyment because, in fact, it’s often effort that ultimately creates long-term satisfaction.”

“…we concluded that once we feel that we have created something, we feel an increased sense of ownership—and we begin to overvalue the usefulness and the importance of “our” ideas… Would the simple act of reordering the words to form the solution be enough to make people think the idea was theirs and consequently overvalue it? …even reordering the words was sufficient for our participants to feel ownership and like the ideas better than the ones given to them.”

“…if I had run my presentation for the bankers less like a lecture and more like a seminar in which I asked them a series of leading questions, they might have felt that they had come up with the ideas on their own and hence adopted them wholeheartedly. There’s also a negative side to this, of course. For example, someone who understands how to manipulate another person’s desire for ownership can lead an unsuspecting victim into doing something for him. If I wanted to make a few of my doctoral students work on a particular research project for me, I’d have only to lead them to believe that they came up with the idea, get them to run a small study, analyze the results—and voilà, they’d be hooked.And, as in Edison’s case, the process of falling in love with our own ideas may lead to fixation.Once we are addicted to our own ideas, it is less likely that we will be flexible when necessary (“staying the course” is inadvisable in many cases). We run the risk of dismissing others’ ideas that might simply be better than our own.”

On Revenge:

“…despite all the harm caused by revenge (and anyone who has ever gone through a bad breakup or divorce knows what I am talking about), it seems that the threat of revenge—even at great personal expense—can serve as an effective enforcement mechanism that supports social cooperation and order.”

On Adaptation, Pleasure and Pain:

“You may think that taking a break during an irritating or boring experience will be good for you, but a break actually decreases your ability to adapt, making the experience seem worse when you have to return to it. When cleaning your house or doing your taxes, the trick is to stick with it until you are done.”

“The lesson here is to slow down pleasure. A new couch may please you for a couple of months, but don’t buy your new television until after the thrill of the couch has worn off. The opposite holds if you are struggling with economic cutbacks. When reducing consumption, you should move to a smaller apartment, give up cable television, and cut back on expensive coffee all at once—sure, the initial pain will be larger, but the total amount of agony over time will be lower.”

On How to Pick a Partner

“…before committing to any long-term relationship you should first explore your joint behavior in environments that don’t have well-defined social protocols (for example, I think that couples should plan their weddings before they decide to marry and go ahead with the marriage only if they still like each other).”

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