Nothing To Say

OK, maybe I do have a few things to say about startups and technology...

Posted at 10:37 pm

2008 May 31

Predictably Irrational – Your Customers 1

Just like Josh and everyone else in the TED Book Club,
I recently received my copy of Predictably Irrational by Dan Ariely. I met Dan years ago at an MIT event while I
was working at eBay, and afterwards he came up and introduced himself, and
commented on how good eBay’s fraud systems were. Seems he and his students were testing the
effects of shill bidding on final values on eBay, and that the eBay trust and safety team was catching
them and shutting down their accounts every time. I knew I liked him then, and I love his new


Examples include the
concept of relativity in our choices, and the overwhelming power of the middle
choice. It explains the concept of
behavior herding, and the most powerful four letters in marketing – FREE. It explains the difference between social
norms and economic norms – a subtle but often overlooked distinction in what
drives behavior, and how the placebo effect is real. His ideas for bundling medical tests like
regularly scheduled auto maintenance, and a credit card that rewards you for
spending wisely could change society. I
passed a copy around at a board meeting last week, and one of the board members
bought it and read it that night, and the ideas of how to apply it were flowing


How about a couple real-world examples from Microsoft? Well, if customers were
rational, Microsoft’s new cash-back search would move massive market share, and I wouldn’t bet on it. And the $14.95 per month unlimited music
model on the Zune should have customers lining up instead of paying $.99 per
song from Apple, but it hasn’t. Predictably Irrational is a must read for
anyone interested in why customers behave the way they do, and why you behave
the way you do.

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