DAN ARIELY

What kind of people would be able to rationalize better than other people? Better storytellers, right? Creative people, right? Because if you're creative, you find more ways to cheat and still yourself a story about why this is okay.

Disasters are usually a good time to re-examine what we've done so far, what mistakes we've made, and what improvements should come next.

We should teach the students, as well as executives, how to conduct experiments, how to examine data, and how to use these tools to make better decisions.

In a world where everyone is behaving honestly, any dishonesty constitutes a big infraction. But, in a world where many people are behaving dishonestly, and the news is filled with stories of their infractions, even big infractions can feel small to the perpetrator.

While we somehow understand revenge on an intuitive level between individuals, I do suspect that companies, assuming that people are rational, completely miss and underestimate the motivation people have for revenge.

In terms of the actual curriculum for management education, my own view is very simple-minded: The world is incredibly complex, it changes all the time, and we should not even hope that we could create a general model that accurately describes the world in all its possible states.

Honesty is a complex and tricky thing, and we don't want to be honest all the time.

The experiments show quite clearly that, as you resist more and more temptation, you're actually more and more likely to fail.

Even the most analytical thinkers are predictably irrational; the really smart ones acknowledge and address their irrationalities.

It is helpful to think of people as having two fundamental motivations: the desire to see ourselves as honest, good people, and the desire to gain the benefits that come from cheating - on our taxes or on the football field.

It is true that from a behavioral economics perspective we are fallible, easily confused, not that smart, and often irrational. We are more like Homer Simpson than Superman. So from this perspective it is rather depressing. But at the same time there is also a silver lining. There are free lunches!

Because cheating is easier when we can justify our behavior, people often cheat in small amounts: We can come up with an excuse for stealing Post-It notes, but it is much more difficult to come up with an excuse for taking $10,000 from petty cash.

I always found the appeal to the market gods a bit odd. Why would the market fix mistakes instead of aggravating them?

Dishonesty is all about the small acts we can take and then think, 'No, this not real cheating.' So if you think that the main mechanism is rationalization, then what you come up with, and that's what we find, is that we're basically trying to balance feeling good about ourselves.

We talk about honesty, but the reality is we have lots of human values, and they are not all compatible. We don't always tell the truth about everything, no matter what the consequences.

If we all make systematic mistakes in our decisions, then why not develop new strategies, tools, and methods to help us make better decisions and improve our overall well-being? That's exactly the meaning of free lunches- the idea that there are tools, methods, and policies that can help all of us make better decisions and as a consequence achieve what we desire-pg. 241

When we think about labor, we usually think about motivation and payment as the same thing, but the reality is that we should probably add all kinds of things to it - meaning, creation, challenges, ownership, identity, pride, etc.

The retail industry has its own headache: it loses $16 billion a year to customers who buy clothes, wear them with the tags tucked in, and return these secondhand clothes for a full refund.

Money actually becomes even more difficult than other things because it's very hard to imagine what the benefits are to saving. So, imagine that you see a new bicycle, a new pair of shoes, or something today. You know exactly what you are giving up if you are not buying it, what are you gaining in the future if you are not getting it. So, you are giving up the bicycle today, what is it in the future? What will happen if you send another $1,000 to your retirement fund? What difference will it make? It is very, very hard to figure out.

In total, by giving people $30 bonus, Intel lost almost 5 percent of productivity. That's a lot. Now, think about it. You give money because you think this would increase motivation. It actually decreases motivation.

The problem with opportunity cost is that opportunity cost is divided among many, many things.

Who would you trust right now? Which bank would you trust? Which investment would you trust? Do you really want to put your money; do you want to suffer more of these losses that we just had? You know, these volatility that we see is just unexplainable by any rational standards. Nobody has any clue about how to explain this, and nobody wants to experience that. So, we hold more money back, we don't necessarily want to invest in the market and by default, people are saving more.

Imagine you owe on five credit cards, you owe five debts. So which debt should you pay first? And the answer is very simple: You should pay the one with the highest interest rate first. But that's not what people do.

I don't know what exactly the translation is but when we do consume something now, something else has to give at some point.

Rainy day savings are incredibly important, because from time to time, bad things happen. And if you're not prepared for that, it's going to be really terrible.