  We develop a model to study the role of rationality in economics and biology.
The model's agents differ continuously in their ability to make rational
choices. The agents' objective is to ensure their individual survival over time
or, equivalently, to maximize profits. In equilibrium, however, rational agents
who maximize their objective survival probability are, individually and
collectively, eliminated by the forces of competition. Instead of rationality,
there emerges a unique distribution of irrational players who are individually
not fit for the struggle of survival. The selection of irrational players over
rational ones relies on the fact that all rational players coordinate on the
same optimal action, which leaves them collectively undiversified and thus
vulnerable to aggregate risks.
