Dan Ariely is an expert when it comes to irrationality. He even signs his emails with “Irrationally yours, Dan.”
Ariely, the James B. Duke Professor of psychology and behavioral economics at Duke University, will make his second morning lecture appearance of the week at 10:45 a.m. today in the Amphitheater.
Ariely’s interest in irrationality stems from his personal experience during his stay in a hospital. He witnessed nurses and doctors act and operate with good intentions, but in reality, those actions and procedures were not best for the patients.
“From that point on, I started thinking about all kinds of cases where our intuitions lead us awry,” Ariely said.
There are two definitions of irrationality, Ariely said. The first is the standard economic decision, which says people are rational if they have complete and transitive references.
But Ariely cares more about a different definition: when people don’t understand the forces that control their behaviors, they can make irrational choices.
He uses these definitions to guide his research on irrationality pertaining to pain, health, relationships and money management.
Ariely discussed self-control and decision-making in Monday’s lecture titled “Who Put the Monkey in the Driver’s Seat?”
He also discussed his personal experiences and how he was sometimes able to trick himself into making rational decisions. In today’s lecture, Ariely will build off Monday’s topics and focus more closely on irrational decision making in relation to money management and the psychology of money.
“Money is actually very interesting because we deal with it multiple times a day, but nevertheless, we don’t truly understand how it works,” he said.
Ariely said the interesting thing about money is there are opportunities to spend it any way the buyer sees fit. But that also means choices must be made.
“If I gave you $10 in cash, and I said that’s all you have for the rest of the day, you would understand your trade off,” he said. “But if I gave you a credit card, and you have student loans and a mortgage, it all becomes a lot harder to think about.”
Assumed behaviors, such as tipping servers at a restaurant, can also be considered irrational, even though they occur often.
“In principal and standard economic theory, we shouldn’t do anything that helps people we don’t know,” he said. “Why would we? You go to a different town, somebody serves you food, you never intend to go back to that town again, why would you ever tip that person?”
In his lecture, Ariely said he hopes to discuss how to deal with money better for personal use, from the perspective of institutions, and in terms of how we think about the poor.
“What I care about is to find where people make mistakes and how we can fix them,” he said.
Ariely will follow up this week’s lectures on irrationality with a short discussion with his student researchers as well as a session to design and implement small experiments in the Chautauqua community during the week. Today’s session is at 5 p.m. in the Hall of Philosophy. He will conduct a different experiment each day and analyze the results the following morning.
“Usually we take a long time to design and test experiments but this will be like rapid prototyping,” Ariely said.