The psychologists showed that people take mental shortcuts that cause them to veer from rational behavior.
It shredded the idea that business is all about rational behavior and numbers.
The gains though were not limited to the oil industry or rational behavior.
"But predicting rational behavior from banks is tough at best, " he says.
Ariely, 43, a professor of psychology and behavioral economics, is among the most creative of a new breed of social scientists charting the numerous ways our psychological quirks cause us to deviate from rational behavior.
Whether that human economic behavior is rational or irrational may ultimately be a matter of perspective.
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Although widely embraced by conservatives, critics said it failed to account for the sometimes less-than-rational aspects of human behavior.
The 1996 Telecom Reform Act failed precisely because it did not account for rational, self-interested behavior.
"To me, many of these projects are a result of easy access to capital and a combination of wishful thinking and speculative behavior rather than rational business calculations, " said Victor Teo, assistant professor at the University of Hong Kong.
It challenges our traditional reliance on a model of human behavior that presupposes a rational person capable of being deterred by the threat of punishment.
Nobody would deny that retailing has gotten tougher in the past few years, but equally so, brands have learned that if they can create some degree of emotional engagement (in additional to the rational stuff like merchandise range, fair pricing strategies, and customer service), they are bound to see positive behavior toward the brand.
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