The first book we (the Smarter Product Managers book club - join us!) read was Predictably Irrational by Dan Ariely.

Irrational behavior is a part of human nature, but as MIT professor Ariely has discovered in 20 years of researching behavioral economics, people tend to behave irrationally in a predictable fashion. Drawing on psychology and economics, behavioral economics can show us why cautious people make poor decisions about sex when aroused, why patients get greater relief from a more expensive drug over its cheaper counterpart and why honest people may steal office supplies or communal food, but not money. According to Ariely, our understanding of economics, now based on the assumption of a rational subject, should, in fact, be based on our systematic, unsurprising irrationality. Ariely argues that greater understanding of previously ignored or misunderstood forces (emotions, relativity and social norms) that influence our economic behavior brings a variety of opportunities for reexamining individual motivation and consumer choice, as well as economic and educational policy. Ariely's intelligent, exuberant style and thought-provoking arguments make for a fascinating, eye-opening read. (Feb.)

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Overall I enjoyed this book. I struggled a bit to tie it back to product management but it provided plenty of food for thought in for personal decisions and product pricing. There were sections that helped understand how people do cost-benefit analysis, how they are persuaded by social norms and are driven by moral boundaries.

Chapters:

1. The Truth about Relativity
   
2. The Fallacy of Supply and Demand
   
3. The Cost of Zero
   
4. The Cost of Social Norms
   
5. The Influence of Arousal
   
6. The Problem of Procrastination and Self-Control
   
7. The High Price of Ownership
   
8. Keeping Doors Open
   
9. The Effect of Expectations
   
10. The Power of Price
    
11. The Context of Our Character, Part 1
    
12. The Context of Our Character, Part 2
    
13. Beer and Free Lunches
    
14. The Power of Price
    

Each chapter had lots of interesting studies and experiments (including beer, chocolate and sex) to keep you engaged through the various topics.

Here was my favourite line in the whole book

"Let me start with a fundamental observation: most people don't know what they want unless they see it in context."

This is important, your prospects, for the most part, have no idea really what they are looking for. The book builds on this point through most of the chapters.

If you have a spare cycle in your readings, I recommend this book.

Read another review here: How Product Managers Price Products For Irrational Customers by the The Accidental Product Manager.