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Showing posts with the label Peacock Wiseman theory

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

Public Expenditure and Revenue in Times of Pandemic- Some Notes

The last couple of days is abuzz with a report from the young officers of Indian Revenue Service (IRS) over the proposed taxation measures to overcome the fiscal crisis likely to be created by the extended lockdown. The measures among other things proposed a reintroduction of the wealth tax, an inheritance tax and increased taxation beyond the current 40% for the super-rich. As expected, it has created a furore in the social media. While the government has expressed its reservations on the proposal, the right wing economic conservatives seem not to let down the opportunity of having a go at the proposals. At the same time, the government reaction is making the left led economists and politicos crying foul over the back down and seeking to project government as anti-poor and under the influence of the super-rich. In between the extreme poles, there seem to be many good suggestions that are being given a go-by. While the analysis of the proposals can be undertaken, it would be instruc