It is argued that people are largely rational in the sense of achievin
g their personal goals (rationality(1)) but have only a limited abilit
y to reason or act for good reasons sanctioned by a normative theory (
rationality(2)). In the case of deductive reasoning research, people a
re rational(2) to the extent that they can follow the instructions and
deduce necessary conclusions in accordance with logical principles. A
brief review of such research is provided to demonstrate that people
do possess a significant degree of abstract deductive competence, desp
ite the prevalence of error and bias on reasoning tasks. The major riv
al theories of deduction based on mental rules and mental logic are th
en discussed and compared. It is argued that neither theory is fully d
efined or strictly testable and that therefore much of the current deb
ate between theorists of these two camps is futile. However, a broadly
model based approach is favoured on grounds of (a) greater psychologi
cal plausibility and (b) potential for application to decision making
and probabilistic thinking as well as deduction. It is concluded that
a model based theory of hypothetical thinking might be developed to pr
ovide a broad account of explicit reasoning and decision making.