So I hear what you're saying, but if that's the case then everyone, everywhere acts irrationally all the time. Because nobody is an oracle who knows how everything will play out. Is that the point that you're trying to make? Nobody has perfect information.

I guess what I was trying to describe is that people might act foolishly, but they don't know it's foolish. And most of the time we only know it's foolish in hindsight. At the time it might have been brilliant, but they went broke so it wasn't. If they'd made billions, it would have been genius.

So basically most people have "facts" that they believe to be true, and use them to make decisions that in light of those "facts" are smart. Few people disregard all facts and reasons and just do whatever, or do something counter to what their facts tell them.

What I'm describing might not be the economics definition of rationality, but it's closely tied to the colloquial definition and the idea that pops into my head when someone says "rational".

I think it's slightly more subtle than that.

Often people have the information they need to make a rational decision, but they choose to discount, ignore, or misinterpret it. No decision based on this choice can meaningfully be called "rational" without stretching the definition of rationality to the useless.

This is quite different that making a rational decision based on incomplete or imperfect information.

Modeling human beings as rational actors, even in aggregate, is often a deeply flawed approximation for this reason.

> So I hear what you're saying, but if that's the case then everyone, everywhere acts irrationally all the time.

More like: a sufficient number of independent agents (or aggregate populations behaving as an agent) behave irrationally often enough to make discrete predictions impossible.

I don't think that predictions have anything to do with rationality. Just because YOU think people should behave one way with the information that YOU have doesn't necessarily have any bearing on what they will do. Especially since you don't know what information they have that you don't, and what information you have that they don't.

Even when you know the information they have it's (currently) impossible to predict what someone will do. It's impossible to know what information they will care about, what they think is in their best interests versus what actually is in their best interests by a more objective standard, etc.

> It's impossible to know what information they will care about, what they think is in their best interests versus what actually is in their best interests by a more objective standard, etc.

Don't you think it's a little crazy to say that someone else can know what's in a persons' best interests by a more objective standard?

I feel like it's incredibly arrogant and belies a substantial lack of induction. You almost certainly believe that you know what's best for you. By induction we can conclude that everyone knows what's best for themselves, and that those who claim to know better are either charlatans or have a distinct lack of empathy.

"Believing an action is a good idea or in your best interests when it actually isn't, or basing decisions on a warped perception of reality, is pretty much a textbook case of acting irrationally."

No. It is not. This is just a flawed definition you have invented on the go.

Being rational means using reason, just that. But GIGO applies, your thinking process could be flawless but your assumptions could be wrong: https://en.wikipedia.org/wiki/Garbage_in,_garbage_out

The people at Rapa NUI were totally rational about destroying trees to build Moais, because their model of the word implied God wanted that.

If the God Rapa Nui people believed in actually existed and he wanted to destroy trees for satisfaction, then it makes total sense to destroy all the trees.

I thought rationality was a measure of how one's actions are based on what you know, but not the things you don't know.

Prior to finding out that the NSA was wiretapping all the things, it might be considered irrational to expect them to intercept and store all of your information. Now that we know that, it would be irrational NOT to think that. The truth in both cases is the same: the NSA has been carbon copied on all of our packets for ages, the only difference is that now we know it's true (and not a "conspiracy theory").

Maybe someone will prove me wrong (and thus irrational), but I believe you're mistaken about what "rational" means:

The definitions and synonyms for rationality (found, e.g., with Google Define) are heavily clustered around reasoning, i.e. the ability to reach valid conclusions from your premises. Nowhere do I see mention that your information had to correspond to reality.

If I were to believe with great certainty that my wife is an alien breeding a cluster of biological weapons that will destroy all of humanity, and assuming that I want to prevent this from happening, reason would compel me to kill her. It would be a completely rational act.

People get this wrong because holding such beliefs is typical for crazy (= irrational) people. Because to _arrive_ at this belief, unless it was imposed on me through drugs, brain damage or brainwashing, would involve some major failures of reasoning at some _earlier_ point. I would have to e.g. believe that I was privy to information that the rest of the world didn't have, which is a pretty unreasonable thing to believe, given what every adult knows about how the world works.

Less radical example: At some point in history, it was considered common knowledge that the world is flat, and seafaring too far in any given direction runs the risk of falling off the edge. So sailors were afraid to sail too far. Was this fear irrational? Not at all! Based on the best human knowledge at the time, people had good reason to be afraid. That fear would be irrational for a well-informed person of our time, sure, but only because we meanwhile have access to better information.

Hypothetical: Maybe there's a meteor headed for Earth, due to destroy us all in a month. Let's say for now that this is reality - but we don't know it because NASA hasn't seen this meteor yet. If rationality were based on absolute reality, then the rational thing for us to do would be to build spaceships or blow our life savings on drugs and hookers. But that's silly, because we can only base the well-reasoned-ness of our actions on what we know. And for lack of omniscience, everyone's knowledge will always be imperfect, and with perfect reasoning (= rationality) our actions can only be as good as the information we have.

>At some point in history, it was considered common knowledge that the world is flat, and seafaring too far in any given direction runs the risk of falling off the edge.

I'm unable to find any historical evidence this statement was ever true.

For example, pop culture thinks it was true in the Middle Ages, but it was not [1].

[1] https://en.wikipedia.org/wiki/Myth_of_the_flat_Earth

You say "I'm unable to find any historical evidence this statement was ever true." I can only guess that your failure is based on a reluctance to even try, or you would have found a whole raft of ancient cultures and their public intellectuals documenting flat-earth beliefs in the Wikipedia article on "Flat Earth."

I am and was very aware that knowledge about the Earth's sphericity is more ancient than some people may think; so I intentionally made my statement sufficiently vague to avoid your kind of quibble.

But who has the information they need to know what is in their best interest?