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Optimally Irrational: The Good Reasons We Behave the Way We Do
Optimally Irrational: The Hidden Benefits of Bad Instincts provides economists, social scientists and researchers in behavioral economics with a clear view of the frontier of research in economics and other behavioral sciences, including how the different biases unveiled by behavioral economics make sense when we try to optimize problems. The book evaluates the role of bias in human economic behavior, considers the human decision-making processes as the product of natural selection, and explores why we behave the way we do.
Discusses how we think about, and adopt, apparently irrational behaviors and biases in empirical research
Explains how biases may be adaptive solutions to well-posed optimization problems under constraints
Unites advances in behavioral economics with those from other behavioral sciences and evolutionary biology
Discusses how we think about, and adopt, apparently irrational behaviors and biases in empirical research
Explains how biases may be adaptive solutions to well-posed optimization problems under constraints
Unites advances in behavioral economics with those from other behavioral sciences and evolutionary biology
321 pages, Kindle Edition
Published November 3, 2022
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326 people want to read
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December 18, 2023
The idea of the rational actor in economics has often been ridiculed and criticized as a derogatory view of what humans are like: selfish, cold-hearted calculators, basically psychopaths. And the critics have often insinuated that this analysis has been normatively loaded; humans as perfect cogs in the machinery of capitalism. The accusation is that this is how economics wants people to behave. Lionel Page does not use this line of attack in his book. Rather, given the various empirically determined biases, he asks: if the actual behavior of humans is often significantly different from that predicted by the rational-actor model, then why is it so? Instead of scrapping the idea of the rational actor, he uses it as a starting point to figure out what the mechanisms are that cause these departures.
This is, in my mind, the best way to deal with the issue. Beginning with a baseline of rationality, defined in some way, the investigation in why it is not adhered to in particular cases might give us interesting insights into what is going on. Is the particular model of rationality mistaken or limited in some way? Are some unaccounted-for mechanisms active? Do we need to consider other factors? If so, what are they? So, instead of just tossing out the idea of the rational actor, an analysis of exactly how and why it fails may give us vital information.
The framework of economics since at least the beginning of the twentieth century has been based on the idea of the rational actor. This is an idealized person who acts selfishly with clear goals and does so according to logical reasoning about preferences and how to satisfy them according to the situation. But in the last 30 or so years, the focus has increasingly been aimed at the fact that we humans systematically deviate in many ways from this idealized actor. There have been many studies in economy, psychology, behavioral science and related fields that find different kinds of biases in how humans act and think various situations.
Lionel Page's aim in this book is to apply an overarching framework of evolutionary thinking to explain the many disparate results. His argument is that many of the seemingly biased or flawed human behaviors are actually perfectly reasonable adaptive solutions to practical problems. Hence the title of the book: Optimally irrational. Page initially makes a very simple point: if we humans are stupid, irrational and generally inept, as some have interpreted the results of behavioral studies, then how come we are still around? Should not evolution have disposed of humans if they were so badly flawed?
Page summarizes a huge amount of scientific results and presents it in a very accessible manner. His descriptions and arguments are clear and concise. In general, I find them persuasive and thought-provoking. For instance, in choosing between several different options, we almost never have complete information, and obtaining complete information would be prohibitively expensive. So if we want to make a choice, we will have to decide when to make the choice given the remaining uncertainties. That is why rules-of-thumb and gut feeling are required. They are effort-saving devices, that usually produce results that are good enough. But in certain situations they fail. We do not have to feel like lesser human beings for choosing among alternatives just based on a feeling.
Another example is the fact that the absolute level of some good (health, income, etc) does not seem to determine how satisfied we are with the current state of affairs. Rather, it is the comparison of our level to some reference point that matters. Why? Page presents several different possible explanations which are all very interesting.
Page ends his book with a very interesting discussion on the history of the idea of rationality in economics, and how it relates to the place of psychology in that science. For example, one criterion of rationality of choice is called the axiom of the independence of irrelevant alternatives. Given a specific set of alternatives, the preferred choice among those should not be affected by the addition of another irrelevant alternative. But this is often violated. Page cites a scenario invented by the philosopher and economist Amartya Sen: Jane has the choice of going home to John for a drink, or to decline the invitation. She is tempted to go. But then John adds that he can also offer Jane some cocaine. Now, if Jane does not want to take any cocaine, it ought to be rational for her to accept the invitation for a drink and just say no to the cocaine. The availability of cocaine is an irrelevant alternative. But in fact, we would not be surprised if she decides that she no longer wants to go for a drink at John's. The irrelevant alternative has affected her choice.
Page ends his book with advice to his fellow economists: They need to try to figure out why people do things as they do, empirically, and enrich their models of behavior to reflect the evolutionary origins of human preferences, and to take into account the constraints, uncertainties and social strategic dilemmas that are an inescapable part of human existence.
This is, in my mind, the best way to deal with the issue. Beginning with a baseline of rationality, defined in some way, the investigation in why it is not adhered to in particular cases might give us interesting insights into what is going on. Is the particular model of rationality mistaken or limited in some way? Are some unaccounted-for mechanisms active? Do we need to consider other factors? If so, what are they? So, instead of just tossing out the idea of the rational actor, an analysis of exactly how and why it fails may give us vital information.
The framework of economics since at least the beginning of the twentieth century has been based on the idea of the rational actor. This is an idealized person who acts selfishly with clear goals and does so according to logical reasoning about preferences and how to satisfy them according to the situation. But in the last 30 or so years, the focus has increasingly been aimed at the fact that we humans systematically deviate in many ways from this idealized actor. There have been many studies in economy, psychology, behavioral science and related fields that find different kinds of biases in how humans act and think various situations.
Lionel Page's aim in this book is to apply an overarching framework of evolutionary thinking to explain the many disparate results. His argument is that many of the seemingly biased or flawed human behaviors are actually perfectly reasonable adaptive solutions to practical problems. Hence the title of the book: Optimally irrational. Page initially makes a very simple point: if we humans are stupid, irrational and generally inept, as some have interpreted the results of behavioral studies, then how come we are still around? Should not evolution have disposed of humans if they were so badly flawed?
Page summarizes a huge amount of scientific results and presents it in a very accessible manner. His descriptions and arguments are clear and concise. In general, I find them persuasive and thought-provoking. For instance, in choosing between several different options, we almost never have complete information, and obtaining complete information would be prohibitively expensive. So if we want to make a choice, we will have to decide when to make the choice given the remaining uncertainties. That is why rules-of-thumb and gut feeling are required. They are effort-saving devices, that usually produce results that are good enough. But in certain situations they fail. We do not have to feel like lesser human beings for choosing among alternatives just based on a feeling.
Another example is the fact that the absolute level of some good (health, income, etc) does not seem to determine how satisfied we are with the current state of affairs. Rather, it is the comparison of our level to some reference point that matters. Why? Page presents several different possible explanations which are all very interesting.
Page ends his book with a very interesting discussion on the history of the idea of rationality in economics, and how it relates to the place of psychology in that science. For example, one criterion of rationality of choice is called the axiom of the independence of irrelevant alternatives. Given a specific set of alternatives, the preferred choice among those should not be affected by the addition of another irrelevant alternative. But this is often violated. Page cites a scenario invented by the philosopher and economist Amartya Sen: Jane has the choice of going home to John for a drink, or to decline the invitation. She is tempted to go. But then John adds that he can also offer Jane some cocaine. Now, if Jane does not want to take any cocaine, it ought to be rational for her to accept the invitation for a drink and just say no to the cocaine. The availability of cocaine is an irrelevant alternative. But in fact, we would not be surprised if she decides that she no longer wants to go for a drink at John's. The irrelevant alternative has affected her choice.
Page ends his book with advice to his fellow economists: They need to try to figure out why people do things as they do, empirically, and enrich their models of behavior to reflect the evolutionary origins of human preferences, and to take into account the constraints, uncertainties and social strategic dilemmas that are an inescapable part of human existence.
August 1, 2025
Important and information-rich book that looks at (ir)rationality in economics and behavioral science through an evolutionary lens. Many human behaviors then do make sense (especially when you take into account the social networks we live in) and are not mistakes.
Excellent sourcing and clear writing. This, however, is more of an academic book than popular science and reading does take an effort at times.
Page’s substack is also worth a look: https://substack.com/@lionelpage
Quotes
Whenever we criticise the homo economicus, we should not ignore all the contributions of this "standard model" to economics and other social sciences.
I will argue in this book that the way beyond the homo economicus is not to throw away the past insights and just state that people are "irrational". On the contrary, it is the enrichment of this model that often offers the best insight into the rich and complicated patterns of human behaviour.
In this book, I will review a wide range of behaviour that has defied the predictions of the homo economicus model and how evolutionary theory can explain these behaviours in a unified theoretical framework. Before I do so, the next section will present the broad principles of such a framework.
When a big change in the environment happens suddenly, there may be a systematic mismatch between a design and its environment. Decision-making processes selected in a past environment can lead to systematic errors in the present environment. It is reasonable to expect some mismatch when considering how recent and unusual our modern urban lifestyle is relative to the lifestyle of our ancestors.
When a behavioural scientist uses this term, it implies that this scientist has a model of what should be a good behaviour in the situation. The term "bias" reflects that the scientist has a better understanding than the individual about the right way to behave. But often it can be hard to assess whether it is the case. A type of behaviour can be called a bias while it is, in fact, the scientist's model of ideal behaviour that is wrong.
These models of optimal accumulation of information have an important feature: they predict that we make mistakes. Indeed, they imply that we should make mistakes. Aiming for zero mistakes is too costly; one may want to be sure to choose the best product between two video game consoles, but one may also not want to spend tens of hours thinking about it. At some point it is rational to put the issue at rest, make a decision and accept that, while it may have been the best decision given the available information at the time, it may not end up being the right one eventually. So the first insight we have from these models is that it is optimal to make mistakes.
study, Saleh (2018) looked into a puzzling fact: in Egypt, the Christians (Copts) form a minority of around 10% of the population, which tends to be much better off economically than the Muslim majority. One may wonder why it is the case. Could it be because the Christian religion and culture help people to be more successful in life? The historical evidence suggests a very different explanation. Before the Arab conquest in 641, Egypt was mainly Christian. Since in- and out-migrations have been limited, modern Christians and Muslims in Egypt are mostly descendants from the pre-641 population.
For that reason, the change in the proportion of Muslims and Christians has to reflect the conversion of Coptic Christians to Islam in the past. Saleh shows that this conversion was likely very much influenced by economic incentives. From the Arab conquest to 1856, an annual poll tax was imposed on every adult Coptic male. Converting to Islam therefore afforded a way to avoid paying this tax. The evidence suggests that poorer Copts opted to convert so they would not have to pay this tax, leaving only the richer Copts as part of a well-off minority of Christians in Egypt. Religious identities were here shaped by economic incentives.
Far from holding coherent and accurate beliefs, evidence abounds of humans forming systematically distorted beliefs about themselves and others. A particularly salient type of such bias is the existence of widespread overconfidence.
These deviations are, it would seem, one of the major pieces of evidence against humans as being rational. But if humans hold distorted beliefs, it is ngins totally incoherent and nonsensical way. We were selected not for being right about the objective nature of the world but for being successful in convincing others in social interactions such as negotiations and competitions. For that reason, holding accurate beliefs may not be a requirement for success; instead, it may be an impediment. We likely have been selected by evolution to see the world in a way that serves our interest. And this bias explains the nature of a wide range of conflicts in social interactions.
Excellent sourcing and clear writing. This, however, is more of an academic book than popular science and reading does take an effort at times.
Page’s substack is also worth a look: https://substack.com/@lionelpage
Quotes
Whenever we criticise the homo economicus, we should not ignore all the contributions of this "standard model" to economics and other social sciences.
I will argue in this book that the way beyond the homo economicus is not to throw away the past insights and just state that people are "irrational". On the contrary, it is the enrichment of this model that often offers the best insight into the rich and complicated patterns of human behaviour.
In this book, I will review a wide range of behaviour that has defied the predictions of the homo economicus model and how evolutionary theory can explain these behaviours in a unified theoretical framework. Before I do so, the next section will present the broad principles of such a framework.
When a big change in the environment happens suddenly, there may be a systematic mismatch between a design and its environment. Decision-making processes selected in a past environment can lead to systematic errors in the present environment. It is reasonable to expect some mismatch when considering how recent and unusual our modern urban lifestyle is relative to the lifestyle of our ancestors.
When a behavioural scientist uses this term, it implies that this scientist has a model of what should be a good behaviour in the situation. The term "bias" reflects that the scientist has a better understanding than the individual about the right way to behave. But often it can be hard to assess whether it is the case. A type of behaviour can be called a bias while it is, in fact, the scientist's model of ideal behaviour that is wrong.
These models of optimal accumulation of information have an important feature: they predict that we make mistakes. Indeed, they imply that we should make mistakes. Aiming for zero mistakes is too costly; one may want to be sure to choose the best product between two video game consoles, but one may also not want to spend tens of hours thinking about it. At some point it is rational to put the issue at rest, make a decision and accept that, while it may have been the best decision given the available information at the time, it may not end up being the right one eventually. So the first insight we have from these models is that it is optimal to make mistakes.
study, Saleh (2018) looked into a puzzling fact: in Egypt, the Christians (Copts) form a minority of around 10% of the population, which tends to be much better off economically than the Muslim majority. One may wonder why it is the case. Could it be because the Christian religion and culture help people to be more successful in life? The historical evidence suggests a very different explanation. Before the Arab conquest in 641, Egypt was mainly Christian. Since in- and out-migrations have been limited, modern Christians and Muslims in Egypt are mostly descendants from the pre-641 population.
For that reason, the change in the proportion of Muslims and Christians has to reflect the conversion of Coptic Christians to Islam in the past. Saleh shows that this conversion was likely very much influenced by economic incentives. From the Arab conquest to 1856, an annual poll tax was imposed on every adult Coptic male. Converting to Islam therefore afforded a way to avoid paying this tax. The evidence suggests that poorer Copts opted to convert so they would not have to pay this tax, leaving only the richer Copts as part of a well-off minority of Christians in Egypt. Religious identities were here shaped by economic incentives.
Far from holding coherent and accurate beliefs, evidence abounds of humans forming systematically distorted beliefs about themselves and others. A particularly salient type of such bias is the existence of widespread overconfidence.
These deviations are, it would seem, one of the major pieces of evidence against humans as being rational. But if humans hold distorted beliefs, it is ngins totally incoherent and nonsensical way. We were selected not for being right about the objective nature of the world but for being successful in convincing others in social interactions such as negotiations and competitions. For that reason, holding accurate beliefs may not be a requirement for success; instead, it may be an impediment. We likely have been selected by evolution to see the world in a way that serves our interest. And this bias explains the nature of a wide range of conflicts in social interactions.
December 14, 2023
Many of our decisions are puzzling to others and even sometimes to ourselves. A boatload of science has dissected irrational behavior every which way. Nobel Prize winning work by Danny Kahneman concluded that decision making is often colored by unconscious biases. According to many, biased decisions often result in suboptimal results. According to some, these biases should be used by those in authority to unknowingly nudge us into making decisions they believe are good for us.
On the other hand, Optimally Irrational argues that puzzling, irrational decisions may be beneficial rather than detrimental. Lionel Page distills a gargantuan volume of scientific literature and reveals (in an accessible, non-technical writing style) that decision making biases may help provide good solutions to the thorny problems we all face in our lives.
I’d previously recommended Danny Kahneman’s book, Thinking, Fast and Slow, https://brain2mind.substack.com/p/wee...
If you enjoyed Kahneman’s book or Thaler and Sunstein’s book, Nudge, I’d recommend you check out Optimally Irrational
On the other hand, Optimally Irrational argues that puzzling, irrational decisions may be beneficial rather than detrimental. Lionel Page distills a gargantuan volume of scientific literature and reveals (in an accessible, non-technical writing style) that decision making biases may help provide good solutions to the thorny problems we all face in our lives.
I’d previously recommended Danny Kahneman’s book, Thinking, Fast and Slow, https://brain2mind.substack.com/p/wee...
If you enjoyed Kahneman’s book or Thaler and Sunstein’s book, Nudge, I’d recommend you check out Optimally Irrational
September 28, 2025
Lionel Page, economista, explora en este libro —desde una perspectiva evolutiva— las teorías que explican el comportamiento “irracional” observado desde el surgimiento de la economía conductual. Su propuesta no se limita a catalogar sesgos, sino a entender por qué, en ciertos entornos, esos comportamientos pueden ser adaptativos u “óptimos” dadas nuestras limitaciones cognitivas y sociales.
Mi sección favorita fue la dedicada a las normas sociales pues me aportó un conocimiento valioso para comprender cómo se forman, se sostienen y se transforman nuestras interacciones cotidianas. Además, invita a replantear la noción tradicional de las funciones de utilidad: no son necesariamente puramente individuales. No solo importa lo que me ocurra a mí o cómo me afectan las acciones de los demás; también me afecta lo que les suceda a ellos. Es decir, nuestras preferencias pueden incorporar el bienestar ajeno, la reputación y las expectativas sociales, algo que la economía estándar a menudo simplifica en exceso.
Al final, es un libro hermoso, que todo economista —y cualquier persona interesada en entender el comportamiento humano— debería leer.
Mi sección favorita fue la dedicada a las normas sociales pues me aportó un conocimiento valioso para comprender cómo se forman, se sostienen y se transforman nuestras interacciones cotidianas. Además, invita a replantear la noción tradicional de las funciones de utilidad: no son necesariamente puramente individuales. No solo importa lo que me ocurra a mí o cómo me afectan las acciones de los demás; también me afecta lo que les suceda a ellos. Es decir, nuestras preferencias pueden incorporar el bienestar ajeno, la reputación y las expectativas sociales, algo que la economía estándar a menudo simplifica en exceso.
Al final, es un libro hermoso, que todo economista —y cualquier persona interesada en entender el comportamiento humano— debería leer.
October 4, 2024
Just brilliant. Page makes a large work of research accessible to the interested reader and explains the concepts clearly with vivid examples.
Some background in economics / psychology might be helpful, but in case of doubt: give it a try! It will change the way you look at human behavior.
Some background in economics / psychology might be helpful, but in case of doubt: give it a try! It will change the way you look at human behavior.
February 15, 2023
An insightful read with important insights into behavioural science.
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