Do People Really Act Rationally? A Behavioral Look at Decision-Making Under Uncertainty

Jesraaj Mahay

doi:10.36948/ijfmr.2025.v07i05.56888

Do People Really Act Rationally? A Behavioral Look at Decision-Making Under Uncertainty

Author(s)	Jesraaj Mahay
Country	India
Abstract	Behavioral economics provides intriguing insights into how cultural, social, and economic factors shape decision-making in India, one of the world’s largest economies. For example, the tradition of buying gold during festivals like Diwali is influenced not only by culture but also by how these purchases are framed—whether they are marketed as investments or religious customs. Research indicates that this framing significantly affects consumer behavior, aligning with Kahneman’s findings on how presentation influences decisions. The concept of rationality in financial choices also takes on a unique flavor in India, particularly illustrated by the government’s push for digital payments after demonetization. The automatic enrollment in these systems has led to a remarkable surge in adoption, challenging the traditional notions of rational choice and demonstrating how environmental factors can shape decisions. In public health, we see similar patterns. Vaccination campaigns have been successful by simplifying the registration process and highlighting areas with high participation rates. This shows how behavioral insights can enhance public health efforts; default options can dramatically increase participation rates—sometimes from 37% to as high as 86%. These observations reshape our understanding of rationality in India. Instead of seeing individuals as purely rational decision-makers with complete information, it becomes clear that cultural norms, social influences, and cognitive biases are significant factors. This understanding is crucial in India’s diverse socio-economic landscape, where traditional values intersect with modern choices. By recognizing these predictable patterns, policymakers can design more effective interventions that resonate with actual human behavior. This research paper aims to explore how we make decisions in everyday situations where uncertainty looms large. It delves into the impact of common mental shortcuts and biases that often guide our choices. By examining patterns in how we think and behave, the paper seeks to uncover how our decision-making strays from traditional ideas of rationality. It looks at how these mental shortcuts can sometimes be helpful, but they can also lead us to make consistent mistakes. Ultimately, the paper provides insight into the psychological factors that influence our choices when we’re faced with incomplete information, unpredictable outcomes, and tight timelines.
Field	Business Administration
Published In	Volume 7, Issue 5, September-October 2025
Published On	2025-10-17
DOI	https://doi.org/10.36948/ijfmr.2025.v07i05.56888

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Do People Really Act Rationally? A Behavioral Look at Decision-Making Under Uncertainty

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