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Showing posts with the label consumer behavior

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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Debating GM Food

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Genetic engineering is the process of manipulation of genes in an organism or transplanting genes of one organism to another to create robust effects. Applications are multipurpose from medicine to food to agriculture to host of other unexplored domains. There is significant increase in genetically modified (GM) crops that are resistant to pests. It is feasibly a expedient technique than spraying pesticides and possibly long last effects. There are promises of increasing yield per acre, some evidence of which has been perceived in cotton etc. The agriculture industry across the world is ominously subject to rainfall and irrigation. Given the accumulative scarcity of usable water, it is germane to explore less water intensive methods of growing crops. GM embedded crops are understood as an essential tool towards developing drought resistant /snow resistant/ flood resistant crops etc. If GM agriculture is given a free license, endless possibilities ostensibly will open up. Yet, any di
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Rational Spending Rule : To be rational or not

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Rational spending rule, despite the abstract derivation, can be used to make sense of several real world phenomenon.                                                 Some cities have grown vertically while the rest have grown horizontally. To use popular analogy, it can be described as the lift vs the car model. The answers can be sought in utility analysis. Cities which are short of space find it difficult to accommodate people close to the city center. The cost of land being high deter people and either move them to the margins or compel to look at alternatives. Similar is the case with commercial space in land starved locations. An analysis would probably reveal a greater spending on alternative goods than housing.   It need not necessarily be for upper income groups alone. Experts have often wondered on the increased consumption of consumer electronics or durable goods in poorer localities. Dharavi in Mumbai may not have enough space to provide basic housing and sanita
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