ABSTRACT
As we have seen, rational behavior can, under a few relatively undemanding conditions, be seen as utility maximization. That is, people who act in accordance with their preferences and whose preferences can be represented by complete and transitive preference relations act as if they were maximizing the value of their utility function. It is sometimes argued that very often people just do not aim at maximizing their own utilities. Rather, they aim at guaranteeing the best possible outcomes for their families, children, pets etc. So – the argument goes – the model of economic man is doomed to fail for the simple reason that it applies to a very restricted set of circumstances, namely to the transactions of economic actors. This argument, which appears in various camouflages in the literature, is based on a misunderstanding of thin rationality by extending an example of what a person might want to maximize, profit or wealth, to the entire spectrum of human behavior. Utility is not necessarily measured in monetary terms. Person 1’s preference over outcomes or the acts leading to them might well be conditional upon person 2’s expressed or anticipated happiness or pleasure under those outcomes. Consequently, the argument of person 1’s utility function might be a variable or set of variables that have very little or nothing to do with person 1’s income or welfare level in various outcomes.
