'The Upside of Irrationality'

Book reveals surprising negative and positive effects of irrationality.

June 25, 2012
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What if research revealed that moderate bonuses and incentives are more motivating to workers and leaders than extremely large ones? Or that increasing the amount of effort people put into a project changes the way they evaluate the project?

These are just two examples of irrational reactions (and how they can affect our work and productivity) included in Dan Ariely’s book, "The Upside of Irrationality," published by HarperCollins.

In the incentive example, Ariely includes numerous experiments that show the impact of increasing incentives on productivity. With small incentives, productivity increases. As the incentives continue to increase, productivity continues to climb—until it reaches a plateau, when people become too distracted with the incentive to focus on excelling in their work.

“At lower levels of motivation, adding incentives helps to increase performance,” notes Ariely. “But as the level of the base motivation increases, adding incentives can backfire and reduce performance, creating what psychologists often call an ‘inverse-U relationship.’”

The research on project ownership reveals what Ariely terms the “IKEA Effect.” His example is his own construction of a simple prefab IKEA toy chest for his children. While he didn’t design it, cut the wood, or hammer any nails, he felt more pride in it than any other piece of furniture in his house.

“Pride of creation and ownership runs deep in human beings,” he explains. “When we make a meal from scratch or build a bookshelf, we smile and say to ourselves, ‘I am so proud of what I just made!’ The question is: Why do we take ownership in some cases and not others? At what point do we feel justified in taking pride in something we’ve worked on?”

The book is organized into two parts: unexpected ways we defy logic at work and unexpected ways we defy logic at home. The first part has great implications for motivating others and ourselves during our day jobs. Chapters in this part include:

● Paying more for less: why big bonuses don’t always work;

● The meaning of labor: what Legos can teach us about the joy of work;

● The IKEA effect: why we overvalue what we make;

● The not-invented-here bias: why "my" ideas are better than "yours"; and

● The case for revenge: what makes us seek justice.

But even the second part of the book has implications for work and careers, including research and data that show how sometimes the irrational choice is the better one, or simply understanding the irrationality of a situation can help us deal with it.

Ariely uses data from his own and others’ experiments to draw arresting conclusions about how, and why, we behave the way we do. From our office attitudes to our romantic relationships, to our search for purpose in life, he explains how to break through our negative patterns of thought and behavior to make better decisions.

While individuals are motivated in their own unique ways, Ariely’s findings reveal that many of our human motivations are common and shared. And the irrational nature of these motivations can have strong implications for work and business success.

“Whatever approach we take to optimize performance,” he says, “it should be clear that we need a better understanding of the links between compensation, motivation, stress, and performance. And we need to take our peculiarities and irrationalities into account.”

Ariely is a professor of psychology and behavioral economics at Duke University, Durham, N.C. “The Uside of Irrationality” was listed as one of 30 “Best Business Books of 2011” by Soundview Executive Book Summarizer.”

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