ISTM that the author is not so much saying or arguing people are not rational, but that the economic definition of "rational" is missing the modeling of consumer behavior in this area. (i am not an economist.)
I think the economic notion of "rationality" actually gets a lot less credit than it deserves. While there are definitely situations in which consumers do not behave rationally (in the economic sense), they are relatively few and far between.
There are lots of situations in which consumers do not behave according to an observer's (non-economic) notion of "rationally". This is rarely a failure of economic rationality, and much more often a failure of the observer to understand the consumer's notion of utility or cost (or both).
My GF is an economist, and she takes great exception at any phraseology that describes people as irrational. As far as she's concerned, everybody is rational. See this for more details: http://mises.org/library/what-do-austrians-mean-rational
There are lots of situations in which consumers do not behave according to an observer's (non-economic) notion of "rationally". This is rarely a failure of economic rationality, and much more often a failure of the observer to understand the consumer's notion of utility or cost (or both).