Money or Coke?

Ariely conducted an experiment, putting either Cokes or cash into shared dormitory refrigerators. Seventy-two hours later, the Cokes were all gone, the money untouched.

Features

Predictably Irrational, but Highly Entertaining

Ingenious Tests of Human Nature Mix Jane Goodall and B.F. Skinner

February 12th, 2008

By Karl Leif Bates

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Whether it’s because of his personal history or some other accident, Dan Ariely is one of those people who simply looks at things differently.

Humans, he argues, aren’t the perfectly rational beings that classical economics assumes them to be. No, they’re slyly deceitful and self-contradictory, subject to subtle forms of mind control, and nearly helpless when sexually aroused.


He has the data to prove it. “We all make the same types of mistakes over and over. It has to do with the basic wiring of our brains,” Ariely says in an exuberant Israeli accent. “Wouldn’t economics make a lot more sense if it were based on how people actually behave, instead of how they should behave?”

The emerging field that Ariely hopes to make a formal discipline at Duke is something called Behavioral Economics — the merger of mathematically pristine economic theory with the messy lust and greed of actual human nature. The field seeks nothing less than to understand why investors, employees and customers sometimes make ridiculous choices. (See Dan’s video “Theory vs. Reality.”)

Ariely, a visiting professor and alumnus in the Fuqua School of Business, uses everyday props like cash, math quizzes, and audience plants wearing Carnegie Mellon sweatshirts to probe human nature. The results are something like a mix between Jane Goodall and B.F. Skinner.

He once put 6-packs of Coke or plates with six one-dollar bills into shared refrigerators in college dorms to see if cash itself was a variable in people’s honesty. The cash was untouched for 72 hours; the Cokes were all lifted. He also found that simply substituting a token for cash — even a poker chip that will quickly be converted to cash — encourages more cheating. “It’s not a perfect experiment, but it helps you think about it,” he says.

Ariely’s elegant little experiments — dirty science he calls them — take new angles on everything from beer tasting to lying, procrastination, on-line dating and even masturbation. “The greatest thing about being a social scientist is to observe life,” he says. (see for yourself on “The Door Game.”)

“There are two things that set Dan apart,” says former thesis advisor and now Fuqua colleague John Lynch, professor of marketing. “He’s just off the charts in creativity, and he’s really great at seeing how to test an idea experimentally. He can just get things done.”

But on top of that, Ariely is also a lot of fun to work with and learn from, Lynch adds. “I consider him to be as good a speaker as we have in the field of marketing.”

Ross McKinney, director of the Trent Center for Bioethics, Humanities and History of Medicine at Duke can attest to that. After seeing Ariely talk at a conference about the “gray area” of human dishonesty — the gap between what we know is wrong and where we actually start to feel uncomfortable — he invited the behavioral economist to address a monthly brown bag meeting of the white-coated, multi-pager Medical Center group.

“Can it be that honest, good people can cheat and not think about it?” Ariely asked. Absolutely, he replied, while outlining several simple experiments in which otherwise upstanding college students were shown to be inflating their grades on a 50-question quiz if the danger of being caught was removed.

Lessons like this can be important to consider in research ethics, where conflicts of interest or seemingly minor data fudging can come back to haunt a scientist, McKinney adds. “People are able to fool themselves in ways that are subtle. Dan’s experiments are so clever and show these things clearly.”

With dual PhDs in cognitive psychology from UNC and business from Duke, Ariely, 40, has been blazing a bright new trail.

The blurbs on his new book “Predictably Irrational” include four Nobel Prize-winning economists and investment guru Charles Schwab, as well as Ariely’s parents and his wife. The book is an engrossing – and strikingly readable — overview of “the hidden forces that shape our decisions,” and the often witty experiments Ariely conducted to identify those forces. (See also, Dan’s Blog)

Standard economists often complain that behavioral economics lacks a unified theory,” Ariely says. “It’s not clear that behavior has a unified theory! I don’t even hope to have a unified theory. At best, I would like to have a list of mistakes people do.”

And having done that, he’d like to work on fixing those mistakes. “Let’s get people saving, taking better care of their health, stopping corruption.”

(See Also - Video on Time.com , 4:43)

Karl Leif Bates is manager of research communications at Duke, and editor of Duke Research

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