Predictably Irrational and Behavioral Finance

Behavioral Finance
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1 How is the economist ad an example of predictably irrational?
The economist ad is an example of predictably irrational because of the nature revealed in its marketing strategy. The economist seemed to be much knowledgeable about important human behavior. Humans hardly choose things in absolute terms rather than focus on the relative advantage of one thing over another, hence estimating value accordingly.
The economist knew the majority could not tell the best deal between the internet-only subscription @$59 and the print-only subscription @$125. However, he was certain that the majority would opt for the print and internet subscription@$125, which looked relative over the other deals, which was not, but just attracted by the decoy.
2 CEO compensation has actually increased since CEO salaries were announced. According to Ariely, why has this happened?
This happened because CEOs’ salaries were publicized throughout the media, ranking them by pay and comparing their pay with everyone else's. This relative comparison bred dissatisfaction hence the need for more, as every individual still felt underpaid.
It all started with putting the CEO’s payment open by all companies as an instruction from the Federal securities regulators in 1993. Putting the top executives’ pay open was to prevent the boards from giving the executives outrageous salaries and benefits. Therefore, it was hoped to stop the rise in executive compensation had not been able to be stopped in several ways like legislation, regulation, and shareholder pressure.
Just like the statistics have it, in 1973, the average was paid 36 times much as the average worker. A massive increase was recorded later in 1993; an average CEO was being paid 131 times as much as an average worker. But unfortunately, the moment their salaries became public information, instead of the media suppressing the executive perks, it formed a platform for comparison of salaries. Everyone was comparing their pay to the other; even the topmost paid felt underpaid; this led to an unexpected further increase.
3 How does relativity make us unhappy?
It makes us unhappy by creating a platform for unnecessary competition amongst our relatives and workmates. We compare ourselves to others and feel we need more to fit in the circles, which leads to greed, dissatisfaction, and thus unhappiness regardless of what we have.
This is similar to the story of a physician on page 18, whose only dream and desire were to win the Nobel Prize for Cancer research. But a few years later, he realizes that his colleagues were making more merely as medical advisors on Wall Street than what he was making as a Physician. Initially, he was happy and content with his income. But after he had heard about his colleagues who owned yachts, lived in vacation homes, and their expensive lifestyles, he suddenly felt very poor and opted to take a different route. He joined Wall Street just like his friends and was making 10 times his initial income and was able to fit in the society of his friends and let go of his life dream of winning a Nobel Prize for Cancer Research. Just because he wanted to stop feeling poor before his colleagues...