This post and the subsequent discussion prompt me to make a point about the use of the term “rational” in economics and game theory.
I think the people in the linked posts confuse the common definition of “rational” with the way that economists and game theorists use the term. Economists and game theorists axiomatically define a “rational” choice as one that will give the highest chance of accomplishing a previously defined goal given a specific set of parameters. That choice is defined axiomatically as the “rational” choice. Rational in this context does not mean wise, intelligent, most-good-for-the-most-people or any of the other concepts attached to the word in common speech. For example, in poker, game theory defines a different set of choices as rational depending on whether you want to make a killing, come out even or use the game as a pretext to transfer some money to a friend. Game theory does not comment on which of the three goals constitutes the most rational choice.
In the real world, we cannot even begin to establish the parameters of a “rational” consumer or political choice. Which is it more “rational” to purchase: Coke or Pepsi? Which is more important: short-term material equality or long-term political equality? Is it more rational to work as much as possible to generate the highest possible income than it is to work less so you can enjoy time with your family? Is it rational for poor people to vote for politicians to give them money today or vote for a free market on the chance they will be better off long-term? All these questions are meaningless because they ultimately devolve to non-logical, emotive preferences. Different people have different preferences, thus different goals and thus different “rational” choices.
The idea that individuals either as consumers or as voters make “rational” choices presupposes that every human being or, indeed, any human being at all, can at any moment understand the totality of every human interaction at any given instant and that the person can predict all the future possible interactions. Clearly, this is impossible. Rather it is the emergent behavior of billions of interactions that produces optimum outcomes more often than do choices based on more-limited information. Even more realistically, we have to make tradeoffs between all the possible choices, and collectively we have to have a means of negotiating those trade-offs between ourselves.
Whether we choose to define its outcomes as “rational” or not, we can say objectively that the free market processes many orders of magnitudes more bits of information than does the political system. Politics deals with airy abstracts in which all the real-world detail has been stripped out. The free market, by contrast, marks the fall of every economic sparrow — or at least every piece of gum purchased. Unless someone can come up with an explanation for why less information is better, we can presume that the free market will work better over the long run.