When it comes to building the physical world, we kind of understand our limitations. We build steps. And we build these things that not everybody can use obviously. (Laughter) We understand our limitations. And we build around it. But for some reason when it comes to the mental world, when we design things like healthcare and retirement and stockmarkets, we somehow forget the idea that we are limited. I think that if we understood our cognitive limitations in the same way that we understand our physical limitations, even though they don't stare us in the face in the same way, we could design a better world.
We value things more when we pay a higher price for them. The Bayer aspirin and the Rolex watch seem valuable because of how much they cost, not because they're better in practical terms than a generic aspirin or a Timex. Relativity distorts reality. We might be earning 10 times more money than we earned for the same work a decade ago, but we're convinced that we're underpaid if the people around us are earning more.
Dan Ariely states "Consumers make numerous decisions on a daily basis. Therefore by understanding the underlying mechanisms that drive the particular choices consumers make is invaluable". His goal is to argue and demonstrate that individuals sometimes make decisions according to preset rules and not their preferences, and that such a decision making mechanism may lead them to make decisions that don’t always maximize their utilities.
The more our minds are befuddled by falsehood, misperceptions and illusions – the less able we will be to determine correct courses of action and make wise decisions. Our view of reality is like a map with which to negotiate the terrain of life. If the map is true and accurate, we will generally know where we are, and if we have decided where we want to go, we will generally know how to get there. If the map is false and inaccurate, we generally will be lost.