when irrationality is reasonable

Dan Ariely is a behavioural economist who has written a couple of really interesting books: Predictably Irrational, and The Upside of Irrationality. In the latter, he includes a chapter about the powerful role that emotion plays in our choice to help others. It won't come as a surprise to anyone who works in the fundraising sector, but it's really enlightening nonetheless.

I've just finished his first book, Predictably Irrational, and one of the many things that interest me about it is his extended investigation of trust and honesty, both individually and socially, through an imaginative series of quick and simple experiments.

One of the things he finds is that there is a clear distinction between the things we do for personal, non-monetary reasons, and what we do for money. In example after example, he and his collaborators show how seemingly irrational we are when thinking about value; for instance, lawyers who refuse to reduce their rate for poor clients, but who instead accept a request to work for free. Bringing one kind of value into a "transaction" made up of the other value, such as offering to give your neighbour three bucks to helping you move a couch, or offering your mother-in-law fifty bucks for a great Thanksgiving dinner, breaks all kinds of social norms, and is likely to get you permanently uninvited or punched in the mouth.

(Now, this could kick off an entertaining discussion of why money seems to inherently hold a sense of obligation, and why it easier for people to give their services away instead of devaluing them. But that's for another post.)

Ariely highlights the discrepancy between these two sets of values when it comes to marketing, and the implication for social media is enormous:

If you're a company, you can't have it both ways. You can't treat your customers like family one moment and then treat them impersonally -- or, even worse, as a nuisance or a competitor -- a moment later when it becomes more convenient or profitable.

Being "friends" with your customers on Facebook is really difficult when you're bombarding them with cross-selling messages all the time, and jumping on them when they're two days late in making a payment. You have to make the decision to have one kind of relationship with consumers, and stick to it. Looking at it like this, it just wouldn't make sense for a bank to try to build consumer relationships like this. (But I'd love to see someone try it.)

Friends offer each other things of real value without ever bringing money into the relationship. Friends listen to each other, and react to what the other says. And those are simply not things that your average MBA or CEO learns how to do.