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03/03/2010

Predicatably Irrational

Irrational

Today, Dan Ariely, a professor in the MIT Media Lab and behavioral economist, gave a talk to the Marketing Club and Israeli Club at Sloan. It just so happens that I was given his book last year for my birthday so I brought it along to get it signed. Essentially, the topics he covered that drove behavioral change were aversion to loss, instant rewards, and regret.

The talk was perfect for a psychology major discussing how peoples' behavior is often quite counter intuitive to how you would think people would behave. One such example he gave was research he was doing that would be applied to outrageous Wall Street CEO bonuses, and how this could possibly hinder performance. Of course, none of the companies wanted to do any experiments or even studies with him because they rationalized that their CEO's were extra special and above these kinds of compensation studies.

But then he spoke about health care applications and how physician compensation must really change from the a reward per service model, which will only promote the most expensive procedures and treatments.

The inscription above reads "Dear Kim, Irrationally yours, Dan Ariely."