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Showing posts from November, 2020

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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Real Life Economics: Big Tech and Network Effects

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  In a few recent posts the increasing power of Big Tech and the possible consequences of the same were discussed. There is an increasing tendency of over reach by the Big Tech and thus has potential impact on the socio-economic-politic equilibrium of the society or the country. Their over reach was manifested in the US elections of late and has been in some ways manifesting itself in the Indian context too.   It would not erroneous to assume Big Tech is growing too big for their shoes and the states need to curb them. The roots of this power perhaps can be traced to early 2000s when Bill Clinton administration compromised with Microsoft in the anti-trust suits thus ensuring Microsoft was not split. Given the more than generous help given by the Big Tech in their campaign, President Biden is unlikely to go hard on them. In fact, this might embolden them to scale in their experiments in different countries. However a question at this stage would be what gives them the power to dictate t
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Barriers to Entry and Global Sports Organizations

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  An earlier post “ Sports Organizations and Structures ” presented an outline on the governance structures in global sports. Sports might be local or regional or national or global but what makes them a formal move towards being recognised as sports is a structure that underpins their governance. As the earlier post pointed out, the governance of international sports is carried out by an organization that is made of national bodies. While there are organizations that do not have a national character, they are usually not part of the mainstream. The only exception seems to be World Triathlon Corporation that organizes the IronMan races. They are signatories to Anti Doping Code and they have their own well recognized tour and circuit. Their relationship with the International Triathlon Union has been of blowing hot and cold. In the recent times, the reinvention of GAISF following the aftermath of the Vizier years, the stepping stone to global recognition and thus a possible inclusion in
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Remembering Diego Maradona

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  It was early morning on a rainy July day in India. Argentina was to play Bulgaria in their final group match of the World Cup Soccer 1994. The time difference between the US where it was being hosted and India meant the match would be morning Indian time. India had never and still has never qualified for the World Cup. But as with each year, Indians have developed an affinity for the South American football and no wonder they would be rooting for Argentina. Yet in every Indian fan’s mind was the question whether their idol, the God, Diego Maradona would play. Maradona had been tested positive for drugs after their previous match, a 2-1 win over Nigeria. There were speculations about his future. As countless Indians switched on the television, they heard the news they dreaded the most. Maradona was out of the World Cup. The match was as good as over. If there was no Maradona, it seemed no point in watching. If in a distant India with little football achievements to celebrate, one can
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Congress and the Loss of Ahmed Patel and Tarun Gogoi

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  COVID-19, the pandemic induced by the Chinese virus continues to claim celebrity victims. In the past few days, two senior Congress leaders Tarun Gogoi, the ex-Assam Chief Minister and Ahmed Patel, the political secretary to the Congress President succumbed to the post COVID-19 complications. They were two contrasting leaders who contributed in different ways to the Congress and perhaps their loss is irreplaceable to the party in the short run. The Congress had lost Shri Pranab Mukherjee ex-President few months back and thus the woes do not seem to end. It would be pertinent to have a look at what their loss would mean to the Congress.   At the outset, it must be said, no one is indispensable and thus everyone have their own shelf life. Nature would have its own replacements. What Ahmed Patel was the UPA-I and II, the same role was executed in different means, but same intended ends by RK Dhawan during the days of Indira Gandhi. While the Congress would await its new Ahmed Patel,
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US Tech IPOs in the Pandemic Times

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  The year 2020 has been pretty bad for the economy across the world. The pandemic induced by the Chinese virus seemingly created havoc across countries. As countries raced to protect their citizens, the trade-off was a lock down quite severe in some of the countries. The economic activity had to halt to protect human lives and prevent the virus from spreading. While the drug companies raced to be the first to produce the vaccine, the policy makers seemed to have little option but to restrict life and freedom till such time the clouds become clear. Recession is being reported from across countries with many reporting a dip in the growth well excess of 20% signalling a possible depression. The fiscal and monetary policy both seemed to show limitations. The fiscal seemed the better of the two with government pushing in cash transfers and stimulus to households and industry alike. There is no doubt the spillovers impacted the market too. The financial markets too have taken a sort of beat
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Measures of Market Power- A Primer

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  The recent US elections has brought to the fore the role of Big Tech. the Big Tech was unapologetic and unhesitating in its power to swing the vote balance towards Biden across the country. One might argue that it was the election management of Democrats in those crucial swing states that tilted the balance in a deeply divided country. Yet it cannot be denied that the Big Tech using its lock-in power on information is acting virtually as a supra-constitutional authority. However, the question that creeps into the mind is obviously how one is going to quantify this market power. It is easy in qualitative terms through a prism of perception to argue a certain firm is powerful or not. One can posit a certain power commands a significant power in deciding the narrative or pushing to the fore its profits or controlling significantly the dimension of prices. Despite this, it would be difficult to conceive market power in the absence of a quantitative measure. The current post surveys the v
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Social Media, Alternate Reality and Real Life Conversations

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  The post “ Deciphering the Social Media Ranting ” discussed the possible reasons why people rant on social media especially Twitter. The post used the theory of signalling in economics to explain why people rant about each and everything to get noticed. A simple post might not attract attention but continuous rants and slogan shouting would perhaps enable them to get noticed, get followers and perhaps at some point achieve a sort of celebrity status. It is just not mere ranting but the way people form opinions and sort to push their opinion that would be of interest. Often, it is made to believe that the opinion of the social media becomes the opinion of the people. It is made to believe that the social media represents the cross section of the people and thus appropriate sample of the views of the population at large. It is made to believe that the mood of the country or the society is best reflected through perusal of the views being expressed through the social media and other con
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Deepawali and Cultural Exports

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The celebration of Deepawali brings in some ways culmination to the season of festivals across India. As 2020 nears it ends, the year has been of turbulence with the Chinese virus induced pandemic continuing to create havoc. Unlike in the previous years, without doubt, Deepawali would be muted in terms of celebrations and exchange of visits among families. Yet the festival continues to remind of the vast cultural depth in India and the unity that emerges across the diverse traditions. Each region or state have their own traditions associated with Deepawali yet across these diversities emerge a thread of unity that binds India together. India is not an artificial construct as many have sought to portray, but a cultural construct that existed for millions of years. Deepawali has now spread abroad thanks to the numerous Indians who have moved overseas for varied purposes. These Indians have carried their cultural traditions in many ways and these are reflected in the way these are celebra
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Why Wealth Possession is Viewed Negatively?

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  Whenever an election happens, there are number of organizations digital or otherwise that post the details of assets of the candidates. Post the elections, they display the asset details of the winners. As per the election commission guidelines, the candidates offering themselves to contest the polls have to file an affidavit listing out the details of their assets and of that of their dependents. They, in addition, have to file details of the criminal cases or convictions that are against them. The latter no doubt is something important and gives insights to the voters about the criminal antecedents of their candidates or prospective elected representatives. The former is perhaps to ensure that they reveal their assets in public given they are aspiring to be their representatives. Question marks can be raised against this but the standard practice is followed in many parts. However, the analysis of the asset details are something to be discussed or pondered over.   These organiz
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Economics in Real life- Amusement Parks and Touring Exhibitions

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  Many past posts have discussed the applications of economics in real life. The modus operandi in each post has been simple. Take an example from real life and discuss how economics consciously or subconsciously plays a role in the same. The events one observes in life are many and diverse. Each ins unique yet perhaps to a keen student of economics, these manifest in many possibilities of economics lies underlined in their demonstration. The current post too will take this forward and brings few more examples that add lustre to economics in life. Real Life Practice/ phenomenon Economics Linkage Unlimited rides in Amusement Parks In India, amusement parks came in much later and it is only in the last twenty odd years, they have spread to many cities. Any visitor to an amusement park would notice an interesting observation. They charge a fixed entry fee and offer unlimited rides for the visitors. One might wonder the reasons behind th
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Bihar Elections 2020- A Note

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  The last phase of Bihar elections are about to be held on November 7, 2020. The counting of votes will happen on November 10, 2020. Along with these elections the counting of by-elections in several states for their Assemblies will also be held. The most interesting part of this election was Bihar going to polls in mere three phases. This represents the journey Bihar has travelled over the years. It was not long when Bihar polls would be full of violent incidents, people dying in clashes. Mercifully, the current round of elections have gone peacefully. In fact, the peaceful conduct of polls in three phases in an environment aggravated by the pandemic unleashed by the Chinese virus represents a case for India to move towards a single or two phase polls in the near future.   Amidst these elections, the pointers from Madhya Pradesh would no doubt be significant. While the BJP might win absolute majority, if it does fail to win significant number of seats it would herald a sort of co
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US Election Wobbles- Lessons to and from India

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  The twists and turns in the US Presidential election counting seem to surprise but should not surprise. The manner in which the votes are being counted leave much to be desired. It apparently seems the Democratic Party machinery leveraged the absentee ballots well to bring down Trump. Apparently, they had to bring down Trump irrespective of what it takes to do him. The pollsters had predicted a heavy swing towards Biden yet it did not materialise. They too have their reputations to keep. Therefore they too have a vested interest in calling more states for Biden so as to come true in terms of their electoral college landslide prediction. If they had predicted a Georgia flip, it must happen irrespective of the means it takes. Trump too is unlikely to go down without a fight. As things stand now, it looks the elections will be challenged and the Republicans hope that the conservative majority in the Supreme Court might hand them the victory.   There is no doubt prima facie, that the
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