And, hence, my assertion that any action which, over time, costs more than its utility cannot, by your own terms, be rational, because it the net benefit is negative — the net cost is greater than the net reward.

I agree with this. Did I appear to say the opposite anywhere?

>>It is possible to envisage an infinitely large utility

No, it isn’t. No living thing is immortal and, therefore, there is a temporal bound at least. Furthermore, any individual’s capacity to benefit (positively or negatively) is bounded by its capacity to ‘consume’ or ‘absorb’ it.

Time is not really relevant here. What matters is that it’s always possible to have a bit more ‘utility’ (remember, it’s a subjective concept anyway).

You appear to be trying to conflate some Platonic ‘well’ of benefit with the capacity of an individual agent or actor to derive utility from it — but the two are entirely separate things and, moreover, the latter not merely dependent upon the existence of an actor/agent whose capacity is, by definition bounded, but the abstract former cannot be said to exist without an actor/agent in the first place and does not exist sui generis, thus giving the lie to your a priori assumption right from the start.

Disagree. I am simply observing that people are never 100% satisfied. Utility is not really ‘derived’ in the sense that value is derived from raw materials, capital and labour. It is more ‘obtained’ from a particular experience of the individual. There is no physical limit to the amount of utility a person can handle.

In this particular instance, I was going with a boolean approach, however. Division results in a ratio rather than a simple value and is, hence, more useful a measure — the end result will either be greater than ‘1’ or less than ‘1’ which makes it easier to establish net utility as either positive or negative overall than looking at the matter on the fuzzier scale of ‘0 to 1’ upon which it may be debated whether there is any negative utility at all and, if so, where the cutoff point should lie.

OK — I am with you. I don’t think rationality is a continuous concept, and treating it as boolean makes much more sense. As for negative utility, I don’t see a problem with that. A transaction that leaves me with less money (or less time or whatever) reduces my overall utility. I think it’s fine to treat this as negative utility. (Note, that may only be part of a transaction: every time I buy something I have less money, but provided it is a rational purchase, the net utility is still positive.)

We can’t produce an absolute value in this instance, nor should we be trying, but the principle of benefit/cost is sound when looking at something such as utility — it is, after all, the process in which we all engage when making rational choices.

Yep.

However, I think you’re on a loser here when it comes to something like smoking, because it is not an abstractly rational choice but influenced by a (negative) physiological factor as well — we cannot talk about it in purely abstract terms such as, say, choosing which job offer to opt for or which hotel to book, neither of which are influenced by the need to stave off physical/physiological cravings.

No. We cannot possibly assume that smoking provides net negative utility, any more than that we can assume that playing the lottery, buying insurance, or donating to charity provide net negative utility. I used to smoke, and I most certainly experienced pleasure from doing so. The only person who can weigh up that utility against the disutility of the cost and of the implications for my health and longevity is me.

Still waiting to learn where the contradiction is… :-)

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Accidental behavioural economist in search of wisdom. Uses insights from (behavioural) economics in organization development. On Twitter as @koenfucius

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