It's been years since I've read Atlas Shrugged, but, this philosophy sounds pretty close to my line of thinking.
What are some observable flaws to this philosophy?
Morally, Objectivism advocates the virtues of rational self-interest—virtues such as independent thinking, productiveness, justice, honesty, and self-responsibility.
Game Theory has clearly demonstrated that in many cases cooperation is a better strategy than pure self-interest. Example:
You and an opponent have two choices in the game: Cooperate or Defect, and you cannot know your opponent's choice until after you have made yours. If you both Cooperate, you each receive $50. If you both Defect, you each receive $20. If one person Cooperates and the other Defects, the one who cooperates receives $5 and the one who defects receives $90.
If you use rational self interest, you will see that if your opponent Cooperates, you will get $50 for cooperating and $90 for defecting. You are better off Defecting.
If your opponent Defects, you will get $5 for cooperating, and $20 for defecting. You are better off Defecting.
But your opponent is also rational, comes to the same conclusion, and you both Defect and get $20. You would both be better off if you both cooperated.
Plus rational self-interest assumes perfect information and an eye to long-term consequences. Those are not often true.