This definition of selfishness (which I agree is the most consistent) was strongly associated with Ayn Rand's [1]. Having grown up in Europe, reading her works was quite a shock.

The only thing I'd add is that in my experience "short-sighted self-interested decisions" are made by people who do not understand externalities, and/or who favour a locally optimal but globally sub-optimal scenario (defectors in the Prisonner's Dilemma). "Socialist" policies like a congestion charge or pollution regulation are thus consistent with individual rights and an individualist philosophy.

[1] see: http://aynrandlexicon.com/lexicon/selfishness.html for quotes from her various books.