The reason irrationality “wins” for the “many people” you mention is that they re-define winning in hindsight when things don’t work out.
Does it really matter if the definition of winning shifts, as long as you still experience the warm fuzzies? I think for some people it doesn’t. Quoting Eliezer’s OB post If satisfying your intuitions is more important to you than money, do whatever the heck you want. Drop the money over Niagara falls. Blow it all on expensive champagne. Set fire to your hair. Whatever. If the largest utility you care about is the utility of feeling good about your decision, then any decision that feels good is the right one.
Does it really matter if the definition of winning shifts, as long as you still experience the warm fuzzies? I think for some people it doesn’t. Quoting Eliezer’s OB post If satisfying your intuitions is more important to you than money, do whatever the heck you want. Drop the money over Niagara falls. Blow it all on expensive champagne. Set fire to your hair. Whatever. If the largest utility you care about is the utility of feeling good about your decision, then any decision that feels good is the right one.