There are two ways for an individual or group to be 'rational' when
working with other people: one is to act as if everyone else was rational,
and the other is to act as if everyone else might be irrational. The former
works if there is a supremely wise adjudicator (e.g. a CEO or market regulator
or legal system) who will protect you from the consequences of other people's
irrational behaviour; the latter is probably a better bet in most circumstances.
My favourite example is in the behaviour of speculative markets. If you
were a silver trader, and you read an article in the Wall Street Journal
saying that a few superstitious speculators were buying silver at the new
moon and selling at the full moon, then you might be tempted to do the
same. Not because you thought that the moon really had an influence on
the price of silver, or even because you thought that other people might
think that it did, but because you thought that other people would read
the same article and calculate the same way as you.
