As you suggest, these things are gotten from relative and not absolute wealth. If I make 50,000 dollars in an area where everyone makes 25,000, I am extremely wealthy, and can name my price for the important things in life. I wonder how the "researchers" missed that point.
Which is why this definition of rationality isn't very practical. In the traditional economic sense, rationality means maximimising money. With this narrow definition (and big assumption), the economic equations become tractable and can actually be analysed. Of course this doesn't represent reality. Going back to Kahneman and Tversky with their study on decision-making under risk (probably even further back than them since this is pretty obvious), psychologists have shown that humans aren't very rational.
But economists still tend to rely on this assumption so that the game theory equations work. Having said that though, I'm not sure whether or not this assumption holds (at least reasonably well) in the macro sense.
Assuming that your popularity, social power, and possibly getting laid a whole lot less are worth nothing to you? The question fails to capture total value, it seems.
Still a very interesting topic. People reason about money in strange ass ways.