The Irrational Bundle. Dan Ariely

who can.

      He is James Hong, cofounder of the Hotornot.com rating and dating site. (James, his business partner Jim Young, Leonard Lee, George Loewenstein, and I recently worked on a research project examining how one’s own “attractiveness” affects one’s view of the “attractiveness” of others.)

      For sure, James has made a lot of money, and he sees even more money all around him. One of his good friends, in fact, is a founder of PayPal and is worth tens of millions. But Hong knows how to make the circles of comparison in his life smaller, not larger. In his case, he started by selling his Porsche Boxster and buying a Toyota Prius in its place.⁴

      “I don’t want to live the life of a Boxster,” he told the New York Times, “because when you get a Boxster you wish you had a 911, and you know what people who have 911s wish they had? They wish they had a Ferrari.”

      That’s a lesson we can all learn: the more we have, the more we want. And the only cure is to break the cycle of relativity.

      Reflections on Dating and Relativity

      In Chapter 1, on relativity, I offered some dating advice. I proposed that if you want to go bar-hopping, you should consider taking along someone who looks similar to you but who is slightly less attractive than you are. Because of the relative nature of evaluations, others would perceive you not only as cuter than your decoy, but also as better-looking than other people in the bar. By the same logic, I also pointed out that the flip side of this coin is that if someone invites you to be his or her wingman (or wingwoman), you can easily figure out what your friend really thinks of you. As it turns out, I forgot to include one important warning that came courtesy of the daughter of a colleague of mine from MIT.

      “Susan” was an undergraduate at Cornell who wrote to me, saying she was delighted with my trick and that it had worked wonderfully for her. Once she found the ideal decoy, her social life improved. But a few weeks later she wrote again, telling me that she’d been at a party where she’d had a few drinks. For some odd reason, she decided to tell her friend why she invited her to accompany her everywhere. The friend was understandably upset, and the story did not end well.

      The moral of this story? Never, ever tell your friend why you’re asking him or her to come with you. Your friend might have suspicions, but for the love of God, don’t eliminate all doubt.

      Reflections on Traveling and Relativity

      When Predictably Irrational came out, I went on a book tour that lasted six straight weeks. I traveled from airport to airport, city to city, radio station to radio station, talking to reporters and readers for what seemed like days on end, without engaging in any type of personal discussion. Every conversation was short, “all business,” and focused on my research. There was no time to enjoy a cup of coffee or a beer with any of the wonderful people I encountered.

      Toward the end of the tour I found myself in Barcelona. There I met Jon, an American tourist who, like me, did not speak any Spanish. We felt an immediate camaraderie. I imagine this kind of bonding happens often with travelers from the same country who are far from home and find themselves sharing observations about how they differ from the locals around them. Jon and I ended up having a wonderful dinner and a deeply personal discussion. He told me things that he seemed not to have shared before, and I did the same. There was an unusual closeness between us, as if we were long-lost brothers. After staying up very late talking, we both needed to sleep. We would not have a chance to meet again before parting ways the following morning, so we exchanged e-mail addresses. This was a mistake.

      About six months later, Jon and I met again for lunch in New York. This time, it was hard for me to figure out why I’d felt such a connection with him, and no doubt he felt the same. We had a perfectly amicable and interesting lunch, but it lacked the intensity of our first meeting, and I was left wondering why.

      In retrospect, I think it was because I’d fallen victim to the effects of relativity. When Jon and I first met, everyone around us was Spanish, and as cultural outsiders we were each other’s best alternative for companionship. But once we returned home to our beloved American families and friends, the basis for comparison switched back to “normal” mode. Given this situation, it was hard to understand why Jon or I would want to spend another evening in each other’s company rather than with those we love.

      My advice? Understand that relativity is everywhere, and that we view everything through its lens—rose-colored or otherwise. When you meet someone in a different country or city and it seems that you have a magical connection, realize that the enchantment might be limited to the surrounding circumstances. This realization might prevent you from subsequent disenchantment.

      CHAPTER 2

       The Fallacy of Supply and Demand

      Why the Price of Pearls—and Everything Else—

      Is Up in the Air

      At the onset of World War II, an Italian diamond dealer, James Assael, fled Europe for Cuba. There, he found a new livelihood: the American army needed waterproof watches, and Assael, through his contacts in Switzerland, was able to fill the demand.

      When the war ended, Assael’s deal with the U.S. government dried up, and he was left with thousands of Swiss watches. The Japanese needed watches, of course. But they didn’t have any money. They did have pearls, though—many thousands of them. Before long, Assael had taught his son how to barter Swiss watches for Japanese pearls. The business blossomed, and shortly thereafter, the son, Salvador Assael, became known as the “pearl king.”

      The pearl king had moored his yacht at Saint-Tropez one day in 1973, when a dashing young Frenchman, Jean-Claude Brouillet, came aboard from an adjacent yacht. Brouillet had just sold his air-freight business and with the proceeds had purchased an atoll in French Polynesia—a blue-lagooned paradise for himself and his young Tahitian wife. Brouillet explained that its turquoise waters abounded with black-lipped oysters, Pinctada margaritifera. And from the black lips of those oysters came something of note: black pearls.

      At the time there was no market for Tahitian black pearls, and little demand. But Brouillet persuaded Assael to go into business with him. Together they would harvest black pearls and sell them to the world. At first, Assael’s marketing efforts failed. The pearls were gunmetal gray, about the size of musket balls, and he returned to Polynesia without having made a single sale. Assael could have dropped the black pearls altogether or sold them at a low price to a discount store. He could have tried to push them to consumers by bundling them together with a few white pearls. But instead Assael waited a year, until the operation had produced some better specimens, and then brought them to an old friend, Harry Winston, the legendary gemstone dealer. Winston agreed to put them in the window of his store on Fifth Avenue, with an outrageously high price tag attached. Assael, meanwhile, commissioned a full-page advertisement that ran in the glossiest of magazines. There, a string of Tahitian black pearls glowed, set among a spray of diamonds, rubies, and emeralds.

      The pearls, which had shortly before been the private business of a cluster of black-lipped oysters, hanging on a rope in the Polynesian sea, were soon parading through Manhattan on the arched necks of the city’s most prosperous divas. Assael had taken something of dubious worth and made it fabulously fine. Or, as Mark Twain once noted about Tom Sawyer, “Tom had discovered a great law of human action, namely, that in order to make a man covet a thing, it is only necessary to make the thing difficult to attain.”

      HOW DID THE pearl king do it? How did he persuade the cream of society to become passionate about Tahitian black pearls—and pay him royally for them? In order to answer this question, I need to explain something about baby geese.

      A few decades ago, the naturalist Konrad Lorenz discovered that goslings, upon breaking out of their eggs, become attached to the first moving object they encounter (which is generally their mother). Lorenz knew this because in one experiment he became the first thing they saw, and they followed him loyally from then on through adolescence. With that, Lorenz demonstrated not only that goslings make initial decisions based on what’s available in their environment, but that they stick with a decision once it has been made. Lorenz called this natural phenomenon imprinting.

      Is