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I recently read Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions, by Dan Ariely. This book is well written, and easy to read. The many experiments described in the book are presented in a lively way which elicits interest, and Ariely goes into just enough detail without boring the reader by getting into esoteric points which are more appropriate for journal papers.

If you think you’re a rational person, read this book as soon as possible. It will help you understand how we are wired and/or conditioned to be irrational, and we typically aren’t even aware of it. This concept can be a bit disheartening, but the good news is that we can fix at least some of this irrationality by being aware of how it can occur and by making a steady effort to compensate for it. The key, it seems, is increasing our awareness and planning to be irrational (this concept is explored in-depth in The Black Swan
as well).

This may not be a ‘personal finance’ book, but it offers a lot of insight into how and why we make decisions and it presents a lot of examples tied directly to money. Not only is this book very interesting and enlightening, but I found it to be quite entertaining as well. I would put this one near the top of your reading list.

By , Fri 17 Jul 2009, Categories: Books