Dollar and Sense (Dan Ariely; Jeff Kreisler, 2017)

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Review: This is very suitable for people who intend to lead a normal life, work a normal job and want to retire normally - the virtue of saving is more important than you ever know. Rated: 8/10

  • Casino mentality
    • Mental accounting: token become less of money
    • The price of free: free parking and drinks in casino
    • The pain of paying: not spending money but like a game
    • Relativity: tips become small as compared to piles of chips
    • Expectations: looks like James Bond
    • Self-control: influenced by stress
  • Emotional accounting: something already paid so you don’t feel the pain
  • Couples are frustrated because they have overpaid their honeymoon and come back stingy and sour
  • Prepaid stuff made us guilt-free to spend
  • Self-herding: we assume the cost and be willing to pay for something above its value
  • Successful advertising copywriters are like magicians: they let us feel like we already own client’s product
  • Can we live up to 80% of our income vs. can we give away 20% of our income
  • Bidding game: place bid to win 100 and all bidders are to pay even if they are outbid to see who is more stupid
  • Don’t let good copywriting fool you to believe a value of something is higher
  • Expectations make us pay more or create huge disappointment
    • Delaying consumption increase drool factor
  • Summary
    • We ignore opportunity cost
    • We forget that everything is relative
    • We compartmentalise
    • We avoid pain
    • We trust ourselves
    • We overvalue what we own and what we might lose
    • We worry about fairness and effort
    • We believe in the magic of language and rituals
    • We make expectations a reality
    • We overemphasize money

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