I agree such a valley is plausible (though far from obvious: more rational societies have better science and better economies; democracies can give guns to working class soldiers whereas aristocracies had to fear arming their peasants; etc.). To speculate about the underlying phenomenon, it seems plausible that across a range of goals (e.g., increasing one’s income; defending one’s society against barbarian hordes):

• Slightly above-average amounts of rationality fairly often make things worse, since increased rationality, like any change in one’s mode of decision-making, can move people out of local optima.

• Significantly larger amounts of rationality predictably make things better, since, after awhile, the person/society actually has enough skills to notice the expected benefits of “doing things the way most people do them” (which are often considerable; cultural action-patterns don’t come from nowhere) and to fairly evaluate the expected benefits of potential changes, and to solve the intrapersonal or societal coordination problems necessary to actually implement the action from which best results are expected.

Though I agree with Yvain's points elsewhere that we need detailed, concrete, empirical arguments regarding the potential benefits claimed from these larger amounts of rationality.