Posts

Showing posts with the label Bollywood

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

Formula Bollywood, Retail and Implied Demand Uncertainty

  The past posts have often portrayed the applications of economics in real life. To stress the obvious again, economics is far from abstract. There is inherent application of its concepts in day to day life. Often the application might be sub-conscious or maybe many a times, the applications find themselves convenient to be theorized. Theory flows from evidence and theory created has to be backed by evidence. Maybe it is a typical chicken egg problem but nevertheless, makes economics attractive. Contrary to many economists who portray a dull life for an economist, in reality, the applications of economic theories in every aspect of life can make the subject very colourful. In continuation of the past analysis, the current post too takes up a few more examples to illustrate economics in real life or what Robert Frank would call economic naturalist.   Let us take the instance of the film industry, India in particular. The Indian film industry thrives on remaking the Western films in