This is a behaviorial economics book by Dan Ariely, I listened to the audiobook, which looks at how we are predisposed in certain situations to make irrational choices like:
1. When people are given a third choice, a different version of one of two similar choices, the person will likely chose the choice with two options, like a trip to Paris with or without a free breakfast or Rome with a free breakfast, the person would likely chose Paris simply because the two choices of Paris predisposes the person to thinking of Paris. So, sometimes just adding a more expensive version of the same product will cause more of the product to be sold.
2. Creating a new "anchor" can change the attractiveness of something, like Starbucks creating an attractive ambiance of its shops can make people want to pay more for coffee than at Dunkin' Donuts. Or, when a person moves from a city with inexpensive homes to a city with more expensive ones, the person is conditioned to buy a smaller home because he/she is 'anchored' to a certain price range. The same thing can work in reverse, affected by the particular 'anchor.'
3. Social versus market norms can affect choices. People sometimes are likely to do more work for free if for a social cause, rather than being paid. Sometimes small gifts work better than more expensive ones, because they keep the relationaship more social and less market-driven. The implication is important as companies have become less generous with creating a family atmosphere with free healthcare and other things like free lunches, company picnics, etc workers likely will feel more dedicated and work harder.
4. Ariely shows how sexual arousal alters a person's think so he/she will act less rational.
5. The book also looks at procrastination and how just having a person set his/her own deadlines works better than having no deadlines.
6. Ownership cause people to value something more than not owning it. That's why trial offers and money return guarantees work well.
7. The book covers the placebo effect and why a 50 cent pill might be more effective than the same one costing $2.50.
8. Thje book covers cheating and why simply having people contemplate the morality of doing something predisposes the person to be more honest - like saying, you know we use the honor system here or asking them if they can list the Ten Commandments even if they make mistakes in doing so. Also, context can affect cheating. People are less likely to steal cash than when someting which is removed from actual cash, like pencils at work, getting stock options at work when acting unethically, etc.
Overall, the book amplifies how human psychology must be considered in economics and how we are conditioned to make economic choices sometimes irrationally and in doing so is worthwhile in making a person think a little deeper about some things which have economic consequences.
