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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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Economic Theory of Partition

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As the world welcomed 1947, the clouds of partition hung around the Indian sky. Jinnah’s intransigence coupled with Congress obduracy to bow to Jinnah’s demands resulted a standstill. To borrow from game theory or chess, it would have been uneasy existence, a cold war but Muslim League had different ideas. Violence was low cost option for breaking the standstill, and therefore riots intensified after the Direct Action Day. Authority collapsed in many places leading to a free for all in some areas. India was on throes of a civil war that might perhaps last more than Byzantine Ottoman War in the Middle Ages. Despite pretensions of neutrality, the British were more than sympathetic to the idea of Pakistan. The roots of British-Jinnah nexus could be traced to the events in the declaration of Second World War and the subsequent Congress reactions to the same. A this stage it is suffice to state heading to 1947, Indian constitutional formation was in a limbo, no agreement on the anvil ove
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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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