Optimally Irrational
The Good Reasons We Behave the Way We Do

The seemingly irrational, puzzling aspects of human behaviour are not bugs, but features. Improving our navigation of the real world.

Lionel Page (Author)

9781009209199, Cambridge University Press

Hardback, published 3 November 2022

325 pages, 15 b/w illus. 4 tables
23.5 x 15.6 x 2.1 cm, 0.61 kg

'The human mind is an elaborate product of natural selection. Optimally Irrational is very welcome in bringing into focus the evolutionary underpinnings of human cognition as applied to economic decisions. Behavioural economics has often taken psychological mechanisms as arbitrary, without regard to the evolutionary design problems that created them. Such an atheoretical approach is questionable in view of the replication crisis in psychology. Page's deeper examination of behavioural economics is thoughtful and wide ranging. I learned much from this insightful and engaging book.' David Hirshleifer, Professor of Finance, University of California at Irvine

For a long time, economists have assumed that we were cold, self-centred, rational decision makers – so-called Homo economicus; the last few decades have shattered this view. The world we live in and the situations we face are of course rich and complex, revealing puzzling aspects of our behaviour. Optimally Irrational argues that our improved understanding of human behaviour shows that apparent 'biases' are good solutions to practical problems – that many of the 'flaws' identified by behavioural economics are actually adaptive solutions. Page delivers an ambitious overview of the literature in behavioural economics and, through the exposition of these flaws and their meaning, presents a sort of unified theory of behaviouralism, cognitive psychology and evolutionary biology. He gathers theoretical and empirical evidence about the causes of behavioural 'biases' and proposes a big picture of what the discipline means for economics.

Part I. Setting the Scene: 1. The homo economius model
2. The psychology of biases in human behaviour
3. The logic of a scientific revolution in economics
4. Evolution and the logic of optimism
Part II. Individual Decisions: 5. Rules of thumb and gut feelings
6. Reference points and aversion to losses
7. Sensitivity to probability
8. The randomness of choices
9. Impatience
Part III. Social interactions
10. Kindness and reciprocity
11. Emotions and commitment
12. Social identity
13. Impression management
14. Selection of delusion
Part IV. Epilogue
15. Rationality?

Subject Areas: Microeconomics [KCC]