Is it irrational to splurge on a luxurious dinner one night?

In the field of economics and decision theory, rational behaviour is often portrayed as the gold standard, the ideal where individuals make choices that maximize utility, or in simpler terms, bring about the best possible outcomes. But what if this notion of rationality isn't as straightforward as it seems?

In the behavioural science field, it is often argued that our behaviour is often 'irrational', driven by perceptual or cognitive biases that distort our decision-making processes. These biases create what economists and psychologists refer to as anomalies, deviations from the rational model. Heuristics and biases very often receive bad press: 'This person spends their savings on a luxurious dinner because of present bias.'

However, rather than viewing heuristics and biases as inherently negative, we should embrace their potential to guide us towards adaptive decision-making. It's essential to recognize that these 'anomalies' don't exist in a vacuum. Every 'irrational' behaviour or cognitive bias occurs within a specific context or frame.

For instance, in an alternative conditional model of maximization proposed by Rachlin, rationality refers to the relation between acts and wider behavioural patterns. Self-control is choosing acts that fit into highly valued patterns. For example, consider a person who wants to save money for a vacation. In a traditional rational model, they might be expected to consistently prioritize saving over spending. However, in Rachlin's model, rationality is not about sacrificing all spending for saving but rather about aligning spending decisions with long-term goals and values.

So, if this person decides to splurge on a luxurious dinner one night, it could be seen as rational within the context of maintaining a balanced and fulfilling life, rather than solely focusing on saving every penny. 

Behavioural science should aim not only to identify these 'anomalies' but also to uncover their functional bases in our environment. So, the next time you attribute a decision to bias or 'irrationality,' consider the underlying factors at play.