Self-interest or Good Behavior

I've long been suspicious of the two key assumption of economics: individuals are rational and self-interested. I've blogged quite a bit on the assumed rationality, and now this article does a good job trying to challenge the other corner stone of "traditional(neoclassic?)" economics. The basic ideas here are:

1. Good behavior, rather than self-interest, is really what makes the economy work.

2. People are nicer, we're more decent, we're more moral and we're more law-abiding than we give ourselves credit for.

3. People generally believe that when someone does something nice to them, they should reciprocate.

My take on this is that what people try to maximize it's not simply utility from consumption, but the 'good feeling', which could come from consuming something, but also, very likely, come from compassion, conscienceless, and sheer altruism. It would be a vast oversimplification to assume people are greedy and we can just let the invisible hand to align them up. We might have misread Adam Smith and put our words into his mouth.