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Decision Making as Output and Bounded Rationality

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  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra
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Today's Imagination, Tomorrow''s Reality: Sci-Fi and Entrepreneurship

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Imagination with all its wildest possibilities yearn to be released from the human mind into actual reality. The expression of grammar of imagination might be story, visual, movie, art, audio, novel or oral conversation. The outcome however remains the same: far reaching, wild, perhaps bizarre, perhaps practically unimagined set of things that human might ever create and use. The outcome, to its progenitor might appear most marvelous, irrespective whether the public at lare perceive it to be crap or otherwise. Yet few might escape the crap trap and generate into hard core imagination underpinned science fiction expressed through visual, written or audio means.   Science fiction is best expressed as an output generated with infinite degrees of freedom for imagination. Science fiction is not a mere work of fantasy. Adventures and challenges endear to humans thus the foundation for visualizing a universe with those infinite challenges. Invariably, there exists a hero who conque
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Gold- Brief Overview

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Gold has a history dating back to 4000 B.C. with traces of usage in Eastern and Central Europe. By 1500 BC, it had become a medium of exchange in Egypt. Gold mines were predominantly located in Asia Minor though later by 500 A.D mines were discovered in Central Europe and France. Gold was widely used in Central and South America . In the 16 th and 17 th centuries, Spanish conquests to Central and South America and subsequent massacre of local population were linked to bring back gold from Central and South America. Gold was discovered in US in the late 18 th Century. US linked dollar to gold in 1792 which was to continue till 1973. Explorations of new lands led to finding of gold in Australia and Southern Africa . History of gold as a money spanned from about 700 BC till about 1930. The First World War (1914-18) and the Great Depression of 1929 resulted in many countries abandoning the gold standard. In 1933, President Roosevelt of the US banned gold exports, halted the con
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Existence of Firm is Rational!

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Classical and neoclassical theories stressed the primacy of the markets for transactions. To theorist of both the schools, the invisible hand manifesting through the price mechanism, resolves the imbalances that exist arising of the mismatch of demand and supply. Yet the ground realities suggested a sort of paradox. Of the total transactions that were observed in real life, the market based transactions occupied a smaller share. Most transactions seem to be occurring internally within an organization. The presence of the firm could not satisfactorily be explained by the early theorists. Profit maximization and utility maximization the key drivers of the neoclassical revolution seem to find limits to this power. The paradox was resolved by Ronald Coase who laid the foundations for transaction cost theory. To Coase, “ market prices govern the relationships between firms but within a firm decisions are made on a basis different from maximizing profit subject market prices. Within t
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Cricket and Heuristics: Case of K. Srikanth

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The current year’s CK Nayadu awards have been awarded to Krishnamacharya Srikanth and Anjum Chopra. To a generation of those began following cricket in the early 1980s, K.Srikanth was a hero to be emulated of. Flamboyance, instinctive, aggressive, No-tomorrow attitude endeared to his fans. Till today, Srikanth’s achievements are sort of discussed in awe. Yet, glance at this statistics reveal otherwise. He made his debut against England at home in 1981-82 test series and last played for India in World Cup 1992. His record as demonstrated by his statistics is pretty ordinary. In his initial days he was part of the ODI team and could have test place permanent only around 1985 or so. He scored just two Test hundreds hardly an indication for cult he seemed to have built. One day internationals were different ball game together. They were just getting popular in India in the early 1980ss. He seemed to be right man for the right format. When he retired in 1992, her was the highest
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WaPo and the White Man's Burden

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Protests against the Citizens Amendment Act might be the harbinger of the last stand in the civilizational battles between decadent Nehru-Marxian intellectual complex and the emergent mass Hindu resurgence. The intellectual public sphere sees every policy move of Modi 2.0 as another nail in their coffin. Nehru-Marxian post-independent narrative with the ostensible aim is to deracinate the Indian psyche is being dared like never before. Current violent manifestations are pointers towards a rear guard battle being waged by the erstwhile establishment self-styled public intellectuals. Given the high stakes for Nehru-Marxian establishment, a virtual existential battle, it turning uglier should not surprise us. The Indic psyche seems to be waking up from the long sufferings of Stockholm syndrome arising of long years of Islamic invasions followed by British rule. The first signs of the challenge emerged around the early 1980s, imaginably in part as reaction to Meenakshipuram conversi
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Economics and Eclipses!

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Eclipses evoke fear, mystery and awe alike. For ancients, it was certainly a mystery. They would have been ignorant of a natural phenomenon that does not experience a frequent occurrence. During total solar eclipse when sun disappears and darkness abounds in the midst of the day, they would have certainly been fear struck and panic ensued for those few moments before the sun began to take ‘rebirth’. Given zero knowledge of science, it would have been most likely to be attributed to super natural forces. Within perhaps centuries, mankind probably make sense of eclipses as phenomenon that occur though the natural linkages might not have been established. To some ancient civilizations, there were astronomers who could predict eclipses in advance. Evidences of eclipses are found in ancient Hindu scriptures and mythology like Mahabharata etc . Given the supernatural attribution to eclipses, it gave rise to several theories and practices. Astrological significance would have added
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Why Elitism Flourishes?

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‘Old Boys Network’ flourishes everywhere. Hardly a domain exists wherein one does not find absence of such a network. Connections determine the entry into the network and merit at least prima facie seems secondary. Despite all talk about meritocracy and such like, organizations and as an extension, the society, rather discouraging old boy network seemingly encourage the same. Often, membership of such a club is a sign of growth and prosperity, rebelliousness indicates an exit from the career path. Numerous instances abound of the same. It would be interesting to decipher the flourishing of the clubs. Clubs once formed create elitism. Yet the society is a pyramid and ideal society is greasy pyramid. Movement into upper layers of the pyramid will generate payoffs that follow exponentially increasing returns. Yet climbing the pyramid is not easy. There is constant sliding down the pyramid as each one seeks to upstage another. Hence those who manage to climb upwards would have their
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A-Z of Organizing an Academic Conference

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a. Gather the database- Who is your target audience? Do you have their email ids, or mobile nos. or social media ids etc. b. If not, can you organize it? these are highly manpower intensive, because we have student volunteer manpower, we are able to do it, yet it was in 2009 we were able to build database after that it is just refining c. If it not possible to organize, then check if it is possible to purchase bulk email extractors etc. they may not be perfect, they also require manpower to organize things.   d. In parallel, prepare the content for the brochure   e. the mailing list and the brochure should be ready around the same time   f. the mailing list has to be personalized but very difficult if you have large numbers. We have not been able to do so far.   g. Hit the first round of mailing and repeat the mailing over at least two iterations.   h. Use professional mass email sender to make job easy. This is first time we are using one at IBA   g. if possible
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Caselets on Leadership

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A Troublesome Employee Ms. Z was a team leader managing a team of 5 members. There are targets to be achieved quarter over quarter. Any lapse would severly curtail her growth irrespective of the reasons for lapses. A new employee Ms. V joins the team. Ms. V suffers a hangover from a personal problem and thus seems least interested in work. No matter whatever task assigned to her, she is stubborn not to work. At the very least, a perception is sought to convey she is not capable of working. Ms. Z however knows V has some capabilities and perhaps pretending the personal hangover as an excuse for non-performance. She perhaps is bidding time to get a better offer. A discussion with the superior fails to yield any result. Apparently, the boss seems least interested in penalising the employee as she seems to have been pushed into the organization on compassionate grounds by somebody top in the hierarchy. The other members of the team start complaining about the non-performance of the
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Perverse Incentives!

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There is a proverbial story about snakes in Delhi. During British days, apparently there was a time when Delhi was infested with snakes. The authorities were challenged to find a solution to the snake menace. People respond to incentives and one might not take recourse to economics for the same and instead follow common sense. So the authorities announced a reward for all those who kill snakes. The condition was the dead snake has to be produced as proof for claiming reward. The story goes when the reward was stopped, Delhi was infested with far more snakes than it began with. In other words the problem had multiplied. Without doubt, one needs to look why the policy failed. Does this story remind us that economics is not infallible and incentive mechanism does not work? Let us probe it in some depth. As Adam Smith first pointed out, at least in documented modern times, people function in their self interest. The self interest as an aggregate is what culminates into enlightened c
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Defining a Sport!

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As a consensus, sports might be universally liked and played ( exceptions aside), yet consensus eludes in defining sports. A quick Google Search shows “ an activity involving physical exertion and skill in which an individual or team   competes against another or others for entertainment.” This definition of course is taken from the Oxford dictionary. Other definitions of sports include                 “Sport includes all forms of  competitive  physical activity or games which, through casual or organised participation, at least in part aim to use, maintain or improve physical ability and skills while providing enjoyment to participants, and in some cases, entertainment for spectators”   - Wikipedia                 “ an athletic activity requiring skill or physical prowess and often of a competitive nature, as racing, baseball, tennis, golf, bowling, wrestling, boxing, hunting, fishing, etc. ”- Dictonary.com                 “ physical activity engaged in for ple
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Pakistan and Role Model Dilemma

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As one comes to terms with the horrors of the recent massacre of school children in Peshawar, What probably went unnoticed were the names of the children who either died or escaped.   Names like Osama, Dawood Ibrahim seemed common.   In a world where names are usually associated with aesthetic or even predictive powers, these names mean something. If names are meant to convey certain signals, these do certainly reflect in a way contemporary mindset of an average Pakistani.   Stephen Levitt in his bestseller, Freakonomics goes on to discuss the economics behind names. Yet, the explanation does not answer satisfactorily, the state of affairs. Incidentally, the broader theme around which Levitt’s ideas revolves around- role of incentives; might help us in some way to understand what it means.   At the heart of the society and its inhabitants is the need to achieve, urge to succeed, climb the higher layers of the power pyramid, places oneself at the apex of the profession. Yet to
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