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Forging social bonds is rational. Sentimental value makes gifts valuable -- if the recipient wants the gift. My mother doesn't want my cash, she wants my affect

• wodenokoto 11y ago
  Yes, of course. But that is not part of the rational model. The rational model is much, much simpler, which is why it is inadequate. Which is the whole point of the article. According to the rational model, the best you can ever hope to do is give your mother a gift of utility X, but most likely you will give her one of less than X. Your mother being rational can always choose to buy the thing with the most utility to her and therefore it is better to give her cash. All the other things you are adding are part of what is called behavioural economics. That doesn't mean they are irrational, or even not rational. But in economic theory, it is fairly new addition, and it is not incorporated throughout economic theory. But the nomenclature stays.