In search of Rationality: An empirical study of students’ behaviour in an Indian B School

Standard Finance theories are based on the notion of “Homo Economicus” or Rational Economic Man (REM). It is based on the premise of rationality where it is considered that every individual takes the economic decision as a rational actor. In fact, the real life examples exhibit a completely different set of observations. People are found to behave irrationally so very often because human behaviour is less the product of logic than of subjective impulses. As observed by Maurice Allais, the inconsistency in decision-making termed as Allais Paradox which attracted so many researchers in different times is our second area of focus. This paper attempts to observe the irrationality in decision-making with reference to a selective group of respondents. It also attempts to find out whether the Allais Paradox holds for the given sample or not.