The desire fir truth can clash with other motives. Material self-interest is the leading suspect, and social pressure for conformity is another force that conflicts with truth-seeking. In addition, some beliefs make us feel better about ourselves. Illusions endure because illusion is a need for almost all men, a need they feel no less strongly than their material needs.
Ordinarily, false beliefs lead individuals to take actions that would be optimal if the world were different. The private cost of an action can be negligible, though its social cost is high.
If agents care about both material wealth and irrational beliefs, then as the price of casting reason aside rises, agents consume less irrationality.
Rational irrationality implies that people have "demand for irrationality". The "quantity" is a degree of irrationality--the magnitude of the agent's departure from the unbiased, rational belief. The "price of irrationality" is the amount of wealth that agent implicitly sacrifices by consuming another unit of irrationality.
Neoclassical demand-for-irrationality curve: demand is a vertical line overlapping the y-axis, indicating an agent who has no desire to be irrational at any price.
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