The magazine subscription deal appeared straightforward. You could buy:

• the Web-only subscription for $59.

• the print-only subscription for $125.

• or the print-Web combination, also $125.

What was the best choice?

Dan Ariely, professor of behavioral economics at MIT, reports that 84 of his students chose the combination deal; 16 chose the Web-only deal; no one took the print-only deal. Then Ariely removed the middle option. Since nobody chose it anyway, that wouldn't affect the other choices, right? This time, however, only 32 chose the combination, while 68 went for the Web-only offer.

The print-only option was a "decoy" whose purpose was to push us toward the more expensive combination deal, Ariely said. It convinces us that the combination is a bargain; when the decoy disappears, so does the perception of the bargain. Ariely recounts the experiment in his startling new book, "Predictably Irrational: The Hidden Forces That Shape Our Decisions."

Now, what does that say about us? That we wander, sheeplike, from one bad decision to the next, unaware that we're being led? Are we just hopelessly thick?

"I think the right way to think about this is not 'stupid' but 'human,' " Ariely said during a recent stop in Atlanta. "That's how we're designed. The thing to do is to use some of these findings to be more cautious."

Ariely's findings — some of them funny, some of them frightening — explain why we do the things we do. "Predictably Irrational" shows how easily we can be manipulated by savvy marketing — how Starbucks persuaded us to pay twice as much for coffee than we were used to paying, for example, or how amazon.com's introduction of free shipping persuaded us to buy more books.

The book is often amazing, and frankly, so is Ariely. As an Israeli teenager 22 years ago, he was standing next to a large magnesium flare that accidentally went off, searing 70 percent of his body with third-degree burns. He was in the hospital for three years. Wrapped in bandages, unable to eat or even to go to the bathroom, Ariely found that he had suddenly, forcibly been removed from ordinary life. At length, he says, he began to observe that life from a different perch.

He went on to acquire two doctorates — one in cognitive psychology, one in business — and has been observing and experimenting with human behavior ever since.

The AJC interviewed "Predictably Irrational" author Dan Ariely recently at a Buckhead hotel in advance of an appearance he was making there. Here is an edited transcript of that interview:

Q: Early in the book, you make the statement that "most people don't know what they want unless they see it in context." And you use several illustrations to show how marketers use that against us. Would you talk about one or two?

A: Imagine a real estate agent who is showing you a few houses. You're saying your limit is $500,000. And the agent says, "Let me just show you this house for $700,000. You're not going to buy it. I just want to show you." Now, what is that house doing? It's not just for showing. What is happening is that house is creating a different reference point, creating something to compare. If it was shown to you a year ago, it wouldn't compare. But if it's shown during the same tour, or the same week, it will act as a comparison. I'm not saying you will buy this house for $700,000, but you might go for $550,000 or $560,000, stretch your limits a little bit.

Q: Would you explain the concept of "anchor prices" and how they can trip us up?

A: One of my favorite experiments is the experiment with Social Security numbers, where we ask students to say the last two digits of their Social Security number, and then ask, would you pay that amount – 79 dollars, or 48 dollars – for all of these options? [The options include a cordless keyboard, a box of Belgian chocolates, a bottle of French wine.] And they say yes or no. And then we say, "OK, now bid for real." And they bid for real, and after the auction is over we look at the relationship between their Social Security numbers and the final prices.

People with high Social Security numbers end up paying much, much more, sometimes hundreds of percent more, than people with low Social Security numbers. It's an astonishing result. If you think about it, you could say, why would my Social Security number change what I'm willing to pay? In reality, it's not your Social Security number. It turns out it's even more bizarre. It's anything that we can get you to think about. We could have asked people about the weather, their shoe size.

The first time you contemplate an answer creates a memory. The next time, when you consider the same thing, you remember what you did before. And you assume automatically that that was a good decision, and you keep on following it. So the way I like to think about it is "self-herding." It is like herding, where we follow people because we assume they know something, but it is even more powerful because we follow ourselves.

Let me give you an example of how this would translate into our everyday decisions about buying coffee and Starbucks. You walk down the street and you see Starbucks. Dunkin' Donuts is six blocks away. You decide to stop here, you're tired, you're hungry, you're thirsty. You get a cup of coffee and it's perfectly fine. What happens next time? You don't remember that you were feeling tired or thirsty. You remember, "Oh, I did this before." Therefore, we do it again. It's as if you stood behind yourself in line. You assume that your previous self was a sensible self, made the decision accurately about going to the Starbucks, and you keep on following yourself. And you keep following yourself over and over and over until it's a habit and you don't really think about it anymore.

Q: You devote a whole chapter to the idea that "Free!" can be quite costly. The chocolate experiment was interesting, and I wonder whether you could recount that experience as a way to explain "the cost of zero cost."

A: So we gave students one of two options: Here's a Lindt truffle — really wonderful truffles — for 14 cents, or a Hershey Kiss for one penny. Almost 90 percent realize that it's a better deal to get the Lindt truffle — it's a better deal. It's a bigger chocolate, it's more high-quality.

Q: You did this in the student cafeteria at MIT?

A: Sometimes this was in the cafeteria itself, by the cashier; sometimes it was in the student union; one time we had a booth in a business center.

Then, for other people, we discount both chocolates by the same amount, by one penny. So from 14 and one it becomes 13 and zero. The important thing about this setup is that we allow people to get one and only one. What that means is that when you take something, you also give something up. And that's the crucial element of this design.

Free is a good price. If I offer you something for free, it's better than one penny. The question is, are you reacting to "free!" or are you overreacting to it? So now we've discounted both products by one penny. What you should be doing is saying, what is the benefit of these chocolates? The costs? And which one of the two gives me bigger benefits? The value of Lindt minus 14 cents, versus the value of the Hershey Kiss minus one cent? You should get the same result when you say Lindt minus 13 and Hershey minus zero. The relationship between them should stay the same. But it didn't. Now almost everybody went for the Hershey Kiss. By doing that, they gave up a better deal. Getting Lindt for an extra 13 cents over the Hershey Kiss is a fantastic deal. In fact, if we ask people, would you give us a Hershey Kiss and 13 cents and we'll give you a Lindt? Everybody wants this deal! It's a great deal! But when something is framed as free, it has an extra appeal.

Now, after doing those experiments, Free! is one of those things that cause me to stop and think carefully: When I see Free! I see a possible trap.

Q: You devote a chapter to "market norms" versus "social norms." Please discuss the difference between them, the reasons they don't mix, and ways we've nonetheless tried to mix them.

A: We live in two kinds of worlds. We live in a social world in which we do things for each other for friendship, and love. And we live in a world of work — money per hour and so on. Here's an example. You go on a date with a woman. You go to dinner and a movie. As you lean in to kiss her at the end of the evening, you say, "You know, it's interesting, I spent about $150 on this date so far." Now, you haven't said anything new. Prices are printed on the menu. Prices are printed on the ticket. She knows exactly how much you spent. Saying it will kill the date. There's no way for a goodnight kiss at that point. Because this is a violation. It's a mix of norms.

We know how to deal with financial contracts. And we know how to deal with social contracts. And when these two things mix, they lead to unexpected circumstances. Imagine if I asked you to help me change a tire on my car. You think, "Hmm, he looks like a nice person, why not?" How about if I offer you five bucks for it? You don't tell youself, "Hey, I get to help Dan plus I get $5 in the deal!" No. What happens is that the $5 completely replaces the social motivation, and you say to yourself, "I don't work for $5. Offer me a hundred, and we can talk."

There are many ways to think about the implications of this idea. Think about the No Child Left Behind policy. Teachers are not paid much money in general. And we rely to a large degree on their intrinsic motivation — the meaning that they get from work — as one of the main drivers of their effort and motivation. And now we have the No Child Left Behind policy in which we offer payment for performance. How does it make a teacher feel differently when they worry about pay for performance rather than ideology and motivation? I think these are the cases in which [market norms] can dramatically backfire.

Q: You found that we tend to value a thing much more, simply because we own it. Take your example of the Duke championship basketball tickets. Among the kids who didn't get tickets, one says he's willing to pay $170 for a ticket; among the kids who did get tickets, one says he'll sell for $2,400. What's up with that?

A: What is happening is that when we become owners of something, it becomes a part of us. Giving it up is something different than if we never had it. As a very odd example, think about how much would you sell your kids for. Probably you would require a lot of money. Forget the moral issues. How about if you didn't own these particular kids. They were somebody else's, and somebody else was going to sell them, how much would you pay for these particular kids? Not as much. There is something important about the kid being yours. It's not anything about the kid. It's the fact that it's yours. It turns out that a lot of things are like that. The things that are yours become more valuable because you get attached to them. And this attachment, now that you start thinking of yourself as an owner, is a part of you.

Think about it this way: We like ourselves. We like things about ourselves, and things that are around us become part of that, they symbolize something about you, they're part of you. (By the way, there's an interesting result that we like the letters in our name more than we like other letters.) This influence does not stop at physical goods and it even influences our ideology — something becomes part of us in terms of ideas, and once it does, how difficult it is for us to part with that. Think about the Republicans vs. the Democrats. When you own an idea, an idea is part of your identity. How difficult is it to give it up, even if you get a lot of evidence to the contrary?

Q: Once you expose these behaviors the way you have, the natural response is to feel sort of stupid. I can't believe I do this!

A: I think the right way to think about this is not "stupid" but "human." That's how we're designed. The thing to do is to use some of these findings to be more cautious: When you see free!, when a decision takes too long, when options are too similar, when somebody else controls the environment, you can try to think about traps you can fall into and just be more thoughtful about it.

I think the big lesson is for companies and government. When we design products — a chair, a bed, a camera, whatever it is — we take people's physical ability into account. We don't build pencils for Superman, and we don't build bats for people who have perfect power, and we don't make shoes for people who can run at infinite speed.

But somehow when we do products for mental abilities, things that require thought — insurance, mortgage, savings, all of those things that don't have any physical association but involve thought — we all of a sudden assume people are Superman.

We assume that people have an infinite capacity to think. And I think we need to take the lesson that we're taking from product design, which is to take into account what people can and can't do.

Why is it so easy for us to see that we're limited physically, we're not Superman, but when it comes to the mental life, we expect people to be Superman? We expect people who got subprime mortgages to be able to compute exactly what's the optimal amount they can borrow and make the right calculation and take the optimal amount of risk and so on. From my perspective, that is the direction I would like us to go. I want all of us to be more aware of the mistakes we make and to try to avoid them. At the same time, business and policy makers, who are designing the world we live in, should also be more aware of these limitations and take these into account when [creating] health-care policies, savings products, etc. We're designing a world that is a very different world than the one that evolution has prepared us for. So we need to be a lot more thoughtful about what we are designing.