Optimal versus theoretical outcomes

Glad to see this point being made. From Are Humans Really That Irrational? by Paul Warren and George Farmer. My past posts about purported irrationality.

What is claimed to be irrational is frequently, when investigated robustly, proven heuristics which come into play under circumstances of scarcity, uncertainty, differing goals and objectives, and absence of trust. Time span (short or long term) and system position (tactical or strategic) also come into play. People are sometimes indeed irrational. Sometimes you fail to understand the context.

For example, I am in a psychology lab and I am told to flip a "fair" coin and have to make an estimate of what the next flip will be. After ten heads, it is more than rational to assume that perhaps they are not measuring my mathematical rationality but my deference to authority. How long will you trust what a person in authority says is true when the evidence is consistently against the authority claim?

Context matters. Trust matters. Uncertainty matters.

From the article:

Although our decision making falls short of the standards required by logic and mathematics, there is still a role for rationality in understanding human cognition. The psychologist Gerd Gigerenzer has shown that while many of the heuristics we use may not be perfect, they are both useful and efficient.

But a recent approach called computational rationality goes a step further, borrowing an idea from artificial intelligence. It suggests that a system with limited abilities can still take an optimal course of action. The question becomes “What is the best outcome I can achieve with the tools I have?”, as opposed to “What is the best outcome that could be achieved without any constraints at all?” For humans, this means taking things like memory, capacity, attention and noisy sensory systems into account.

Indeed - Given my context and constraints, I want the practical optimal outcome, not the theoretical outcome.