Why is "Arragon" spelled wrong, in the Merchant of Venice?

Literacy rates in England were low during Shakespeare's life (around 30%) so relatively few people ever wrote anything down at all.

As a result,the written form of English hadn't yet settled down into a comprehensively accepted form - spelling (even of people's names, Sir Arthur Haselrig in the 1630s and 1640s being a prime example), punctuation,paragraph structure - all were if not random,then certainly open to the interpretation and preference of the writer.

So, "Arragon" is how Shakespeare spelled that particular word at that time when he wrote it down;in late 16th/early 17th century English Language terms,it wasn't a spelling error.

Portia (who was portrayed by Lynn Collins) in the 2004 Merchant of Venice film. I dont know why XD

Spelling was different in the 1600's, it was still Early Modern English.

http://en.wikipedia.org/wiki/Early_Modern_English

the Bard could hardly spell his own name, but he was still the Bard, and has earned the write to have his stuff saved the way it is. I guess. maybe I'm just crazy.

Because it's Shakespeare and he can write how he wants. He made up his own words and you don't see those getting corrected either.