Read: How do you know?
Seemingly irrational behavior or rather bounded rationality is the result of bounded cognitive abilities, bounded willpower, bounded self-interest, and - yes - bounded knowledge. Russell Hardin offers an account of the consequences of - fully rational - limited knowledge, an economics of ordinary knowledge. The question is what extent of knowledge in terms of quantity and quality can we expect from an ordinary person.
Rational ignorance permeates all domains of our daily lives and not just public policy and politics. To illustrate his point, maybe even delineating an extreme, Hardin singles out religious belief. Believes are just one instance of knowledge by authority that lie at the core of an economics of ordinary knowledge. No one can gain expert knowledge in everything and hence has to take many bits and pieces of knowledge at face value from an authoritative source. What is an authoritative source and who is an authority from the perspective of an ordinary person then may limit the quality of knowledge, the extent of its objective truth. Hardin discusses the tension between science and religion, the individual and communal incentives to believe, sincerity, fundamentalism, and extremism. He draws a very bleak picture of society.
Even though Hardin acknowledges the existence of limits on cognitive abilities, will-power, and self-interest his analysis only drops the assumption of perfect knowledge, he is able to explain many seemingly irrational patterns in our behavior. His ordinary person still tries to maximize their utility and decides that obtaining more and better knowledge may not be worth its cost. People remain rational ignorant. Yet, already this small deviation from the standard economic analysis of decisions, choices under uncertainty and in strategic interactions seems sufficient to explain seemingly irrational, i.e. objectively sub-optimal, behavior.
Adding the further bounds to our abilities is not likely to improve the quality of our decisions and welfare. So yes, Hardin draws a very bleak picture indeed.