Economics equates rationality with the satisfaction of a set of axioms. We discuss these axioms and the associated empirical evidence. Topics discussed include completeness and transitivity of preferences, limited attention, overconfidence, and whether humans can successfully construct the full sampling distributions. We then consider procedural rationality and the unreasonable cognitive requirements for solving simple dynamic programming problems. We examine alternatives to mathematical optimization in which people use simple rules of thumb (heuristics) to make decisions. We highlight the heuristics and biases program which clearly shows that the “as if” assumption in neoclassical economics is routinely violated. These heuristics include the representativeness heuristic, the gambler’s fallacy, the hot hand fallacy, the conjunction fallacy, the availability heuristic, the affect heuristic, the anchoring heuristic, base rate underweighting in Bayes’ law, conservatism from underweighting the likelihood of a sample, hindsight-bias, confirmation-bias, false consensus, and regression to the mean. Incentives do not eliminate biases. We also discuss the “great rationality debate.”

A substantial body of research in social psychology suggests that egocentric biases inhibit individuals’ ability to discern norms. This chapter identifies and explains two of those biases - the False Consensus Effect and the False Uniqueness Effect - and then explores their relevance and implications for efforts to identify customary international law (CIL). Among other things, the analysis offers insights on the persistent objector rule, the origins and evolution of CIL, and the merits of rational choice models of state action.