Predictably Irrational

I think the significance of our actions and decisions, whether predictably rational or irrational, depends on the context. In our personal daily lives, as we discussed, we commonly make predictably irrational behavior all the time, everything from judging the best price bargains based on our anchor or reference point to our physical perceptions of objects in a comparative situation. In a business context, however, things need to be looked in a little bit more analytical way. We cannot tell the company's stakeholders and shareholders that we made a certain decision because things looked a certain way, as such arguments would not be received very warmly. We need to base our decisions on facts and data instead.

There have been many times when I have seen pricing information of a product presented in such a way as to influence the decision making, just like the example of a magazine subscription options with expensive option put next to a similarly priced item but less appealing package. I have never paid close attention to such techniques, and after discussing the material in class, I have become more aware of it and realize that such psychologically based methods are in fact quite commonly used in real world.