It is argued that reasoning in the real world supports decision making and is aimed at the achievement of goals. A distinction is developed between two notions of rationality: rationality which is reasoning in such a way as to achieve one's goals--within cognitive constraints--and rationality which is reasoning by a process of logic. This dichotomy is related to the philosophical distinction between practical and theoretical reasoning. It is argued that logicality (rationality) does not provide a good basis for rationality and some psychological research on deductive reasoning is re-examined in this light. First, we review belief bias effects in syllogistic reasoning, and argue that the phenomena do not support the interpretations of irrationality that are often placed upon them. Second, we review and discuss recent studies of deontic reasoning in the Wason selection task, which demonstrate the decision making, and rational nature of reasoning in realistic contexts. The final section of the paper examines contemporary decision theory and shows how it fails, in comparable manner to formal logic, to provide an adequate model for assessing the rationality of human reasoning and decision making.