It is a phrase you often hear in economics, "People do not behave rationally". For example, in one common study, a person is given a hundred dollars and is asked to share some of it with a second person; and if the second person accepts they both keep their share. Economists say that the second person should accept any amount offered, because any money is better than no money. So if the first person keeps $90 and gives the second person $10, a rational second person would accept this because $10 is better than no dollars. But, unsurprisingly, most people will reject the ten dollar offer. It is at this point that economists say 'people are not rational'.
But this claim is false. People are rational. The problem is that classical economics assume all value is expressed monetarily. It is this assumption that is false.
There are forms of value other than monetary value that can't be converted to monetary value. Two examples are 'social value' and 'intrinsic value'. Social value is the value and influence a person has with other people. Status, prestige, popularity, and influence, are social values that can't be exchanged for items of monetary value. In other words, Tiger Woods can't sell his popularity to someone else in exchange for a ticket to the Oscars, but he might be able to use his popularity to obtain such a ticket, while continuing to retain his popularity.
When people make decisions, people consider the social value in addition to the economic value. In some cases, the social value is worth more to a person than the economic value. For example, a business may install a heater in the home of a poor person for free because the publicity they receive for the generous act is worth more to them than they money they made have received for the installation. This is a rational action.
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