Quote from: estevo on April 21, 2011, 06:25:43 PM

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Any definition of rationality that only takes into account monetary incentives is completely flawed.

Depends on the purpose and scope of your definition.

You could say that any model of movement that ignores friction and gravitational forces is "completely flawed". It is certainly not realistic, yet it can be useful to abstract away those things for the sake of isolating other things for study.

In game theory, utility is often given a number (call it money or abstract utility points), and rationality is described as optimization of that. Game theory doesn't pretend that this definition of rationality is adequate for real life. It's just useful for mathematical study.

I understand that some game theory uses this definition of rationality, but I find it to be a misnomer. It's really just financial optimization. If a psychological need is valued more than a fixed monetary amount, it's not illogical to prefer the psychological satisfaction. Otherwise, paying to ride a rollercoaster is irrational. Or paying to give medical treatment to a loved one is irrational. Or willing to pay a lawyer more in legal fees than will be recouped in a tort case, in order to satisfy a sense of fairness, is irrational.