Session 11: Predict- Dan Ariely

His massive burn injuries changed the ways he viewed predictability and irrationality.


He wasn't allowed to interfere with his treatments as they were "experts".

After 3 years he went home from the hospital, went home and started experimenting with other people and their reactions to pain. The result:

We don't encode duration as we encode intensity. If you get a break from what hurts, it makes pain more endurable.

One example: cheating. The experiment: if a simple test was given where people were able to cheat would they?

Did they do it less if big punishment for cheating was there? It didn't. If the probability of being caught cheating was up, it didn't color the amount of cheating. The thing that made them cheat less was their ability to look themselves in the mirror.

Decreasing the fudge factor: a moral sense and a value of the reward (money versus representative money).

Cheating was also affected by their belief that their honesty could be challenged by perceived equals.

The greater the distance from cheating the greater it is.

How does this affect behavioral economics?

When he was at the hospital his favorite nurse explained that his treatment wasn't just painful from him but also for her having to inflict it on him who she liked so much. However since she believed what she was doing was right so it made her not challenge her own behavior towards him in treatment.

The challenging of one's beliefs to improve a situation is so very important in all aspects of life, especially in behavior economics.