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

People and the Third Wave of Chinese Virus

 

The second wave of the Chinese virus induced pandemic seems to have abated in most parts of the country. Yet Kerala continues to defy the projections. Maharashtra too continues to report high number of cases. The scenario in North Eastern States too is not very encouraging though in absolute numbers seems less. The situation however has improved in northern and western states where the cases have dropped down dramatically. The states in the South apart from Kerala seem to be under control though the numbers are still high for comfort. In this backdrop, the states and union territories are opening up their economies and societies. While there are restrictions, the economy seems to be moving back to the days of pre-second wave. The business is likely to pick up in the weeks coming ahead. Yet while one seeks to recover from the second wave, the fear of a third wave seems to linger on. There is a feeling that this might impact children more and thus a need to prepare for them.

 

Secondly, there is also issue of vaccinations. The pace of vaccinations has improved over the last couple of weeks but given the population, it still seems slow. The rate limiting step to vaccination seem to be availability of vaccines which in the context of India still are only two. The other vaccines are just making their way into the society. Yet, while there are fears about the third wave linger on, people seem to make the best out of the gap the virus seems to have provided for the moment. They want to make the best of the breather before they are locked in to their homes for the lockdown version 3.0. This has led the people to go for vacations something akin to the revenge tourism. People seem to be flocking tourist destinations like Himachal Pradesh where there is no requirement for a negative RT-PCR test. For instance in Goa, given the requirements of a negative RT-PCR test, people seem to be giving Goa a miss but approaching those destinations where requirements are easy. This brings to the fore many questions on the safety and long term implications relatively speaking of the people.

 

The tourists seem to be giving the social distancing for a toss. This is something visible even in the markets in the city but this is something happening at a different strange place. Social distancing might be given a miss given the sheer size of the population but the tourists seem to have given up the masks. The videos coming out from various hill stations indicate the missing of masks. This is something that is difficult to forget. It must be remembered that the country has not come out of the pandemic. The population that is vaccinated is still relatively low given the demographic size. The countries that were believed to be success stories are facing struggles in coping with the new waves of the Chinese virus. For instance, Israel and Britain both have recorded in excess of fifty percent of the vaccinations are facing the third or the fourth wave. The only encouraging sign is the hospitalizations are relatively low and deaths continue to be very low. However, this does not mean the virus has not disappeared. In the context of India, given the sheer population, the increase in cases too would be very high in terms of absolute numbers. While the experts are of the opinion that the third wave is unlikely to be dangerous and likely to be less intense compared to the first wave leave aside the second wave, there does not seem to be room for complacency.

 

This is something that has to be stressed. The vacation spots are open and it would be good for the local economy. The local economy in tourist places are suffering and therefore there needs to be opening of opportunities for the distressed section. Yet there are trade-offs. The trade-offs are something that are too costly to be resolved. It is not about one individual but the multiplier effect. The virus has a multiplier effect unlike non-communicable diseases which are not multiplicative. For instance, the probability of someone dying in accident does not increase just because somebody close to him or her has died in an accident. Yet to everyone contracting the virus, there is an increased probability perhaps exponentially of the others contracting the virus. This multiplier effect is what would make the tourism or other service industries vulnerable to the waves of the pandemics or even the recess between the pandemics if one might term it so.

 

The authorities have to plan for the social distancing and the mask norms for the tourists or for that matter the shoppers in the malls and the markets. It is alright to open up the economies but there cannot be a compromise on the masks. The different tourist spots have to insist on the visitors wearing masks at the least. The supervision must be strengthened. It might go against the fundamental rights and the informed consent but in case of possible externalities, there must be insistence of meeting the collective interest rather than subservience to individual interest. It is the dichotomy between the individual self-interest and collective interest which results in the rapid spread of the virus compelling the lock-downs. The individual self-interest takes precedence when the aftereffects are not multiplicative and are independent. The collective interest’s gains precedence when the aftereffects are multiplicative. The pictures and the reports coming from various tourist spots and markets are reflective of individual self-interest overriding collective welfare given the weakness of the enforceability of the same.

 

There might or might not be a third wave. The fears might be exaggerated. Yet the way the second wave caught India napping cannot be allowed to be repeated. History repeats first as a tragedy and then as a farce. It would be politically devastating for the ruling parties if the third wave were to emerge in full intensity. In the case of Spanish flu, the second wave was the strongest followed by relatively weaker subsequent waves. The same might be observed in the case of the Chinese pandemic as well. Yet given the artificial nature of the virus as suggested by numerous studies, it cannot be taken for granted. There must exist a suitable mechanism to prevent the possible intensity of the wave. It begins with the simple mask. The people at the heart are responsible rather than the state. The people must begin to view it seriously and not lose guard.

 

 

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