Humans are not cold calculating machines – but this doesn’t mean they are irrational either !
We need to distinguish axiomatic rationality, as used by economists, which is a theoretical construct, from evolutionary rationality, as practised by people in real life .
Many of the so-called ‘biases’ trotted out by behavioural economists to show how humans behave dumbly are actually rational responses to the complex world of radical uncertainty. Evolution in this uncertain world has led characteristics which are primarily adaptive to become embodied in human reasoning. Humans are successful at adapting to the environment in which they find themselves.
Notes from the book, Radical Uncertainty by Mervyn King