Dan Ariely

My passion is understanding the irrational aspects of human behavior, and then finding solutions to overcome the limitations this irrationality imposes on human life.

In a famous section of Mark Twain's novel Tom Sawyer, the protagonist is faced with the unenviable task of whitewashing his aunt's fence. Dreading the schadenfreude of his friends, he pretends to enjoy himself, and one by one his friends are reduced to begging to take his place. As Twain concludes, Tom had discovered a great law of human action: "that in order to make [someone] covet a thing, it is only necessary to make the thing difficult to attain."

Twain's perspective stands in stark contrast to modern economic theory, which assumes that people have a clear sense of what they want and like. Prices of consumer goods are thought to reflect underlying "fundamental" values—specifically, the pleasures that consumers anticipate receiving from these products. These values, however, must be accepted on faith.

Our research suggests that such faith may be misplaced, and that Twain's theory of human nature may be closer to reality. There appears to be a large degree of arbitrariness in consumer valuations. In one study, for example, students were asked to pay $10 to listen to me read poetry. We offered to pay other students $10 for the same experience. We found that students' values were powerfully influenced by the initial question. Those asked if they would pay were willing to pay, and those offered money needed to be paid. But in both cases, students named higher amounts for longer durations. Participants had no idea whether this was a positive or negative experience, but knew that it was more positive or negative if it was longer. This pattern of arbitrary absolute, but sensible relative values, can be seen not only in prices for consumer goods, but in many aspects of the economy.

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