Decision Making as Output and Bounded Rationality

  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

Migrant Egress, Wuhan Virus and the Indian Shutdown


The three week shutdown has turned the focus on the hundreds of homeless and daily wage laborers. Many of them have migrated from different parts of the country into the metro cities in search of livelihood. Question marks arise about their sustenance given there is no possibility of work in the next three weeks. There are of course vultures who want to scavenge on the living homeless and daily wagers. There are others who too are concerned about their survival. Some organizations are taking up work to provide free food etc. to these bottom of pyramid group yet in the curfew it would be difficult to reach out the genuine needy.

Some want the government to implement a Universal Basic Income (UBI) so as to support these families with some nominal amount. Further many living in slums, tents, pipes, roads etc. it would be seen as an easy prey for the China virus. There are of course some voices that have called for egress of these back into their villages. In fact, one of the key criticism of the lockdown has been that the governments did not allow a planned egress of these migrants struggling to find food and shelter in the major cities like Mumbai, Delhi etc. Food canteens opened by the government in some parts are leading to overcrowding defeating the very purpose of the curfew in absence of social distancing.

The question however, as the voices grow calling for egress is whether a planned egress is possible. It would be interesting to recollect a scene from the book “The Fifth Horseman”. In the book, Gaddaffi of Libya plants a nuclear bomb in New York and threatens to blow up the city if Israel doesn’t withdraw from Palestinian territories. While negotiations are on, the plans for evacuation was being discussed. There is a particular moment to decide the modalities of evacuating citizens from New York without creating panic. Either way, when the whole city has to be evacuated, the panic will spread because it will create a strong suspicion and absence of information will only fuel rumours. One method decided for planned evacuation was to allow cars to leave in the alphabetical order of registration numbers. There was one response to it. It can be paraphrased as ‘Do you think the one with the registration number starting with Z will wait for his or her turn?’ the panic will create a stampede as each will seek to be the first to leave the city as it about to explode.

In the context of China virus, everyone was becoming aware of its destructive potential. Already, people were fleeing Kerala back to their states. In fact around 2000 plus people seemed to have left Kerala to North East as this crisis spread one single day. Similarly, there were huge crowds in the stations of Mumbai and Pune waiting to travel back to UP, Bihar and Bengal. A couple of specials were run with huge crowds. Some videos floating about in social media show the crowds waiting to board Pune Patna Express at Pune station. In fact perhaps this was the biggest reason for suspension of trains across the country. The Janata curfew provided the best option for that. In Karnataka, there have been reports of many trying to flee Bangalore by whatever means they get to their villages etc. Without doubt, the bus services had to be stopped.

It is even hazardous to imagine what would happen if any one of these hundreds carry the dreaded Wuhan virus. They will infect no doubt their co-passengers on train which could be around 200 per coach in the crowds. Each of these would infect many more hundreds. Once they reach their village, they would be taking the virus into inland and create virtual havoc. The super-spreaders might be catastrophic for public health in states like Bihar, Bengal and Uttar Pradesh.  Therefore if the disease had to be contained, it had to be isolated in the few existing cities and not given an opportunity to spread to other cities and towns and villages. Therefore, it was a decision of something between devil and deep blue sea; a decision between frying pan and fire. The only sensible approach seemed to be to make people stay where they are while the authorities try to isolate and contain the virus.

Either way, the decision would have damn it if it allows the egress, damn it if it does not allow egress. The government had taken a decision which prima facie seems rational. Try and contain in a region and not give smallest of the opportunities to spread outward. The opportunity was very visible and therefore the gap had to be plugged. Thus trains and other modes of passenger transport were stopped and people holed up in the cities and regions where they are irrespective of the conditions therein.





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