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Showing posts with the label consumer surplus

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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Presumptive Loss and Price Discrimination

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  The Delhi High Court is hearing the appeals of the Union of India against the acquittal of all the accused in the notorious 2G scam case. Among those in the dock are DMK leaders like Kanimozhi and A. Raja the then Union Minister. The hearings on these appeals are likely to get over by early November with the judgment likely to be out by the end of this year. The political ramifications of the judgment would no doubt be felt. Given the approaching elections to the legislative assembly in Tamil Nadu, the opposition DMK would sitting on razor’s edge awaiting the judgment. In some ways, if the accused are convicted, this could have certain implications for the succession planning within the DMK. DMK might be in an advantageous position going into the elections, but an adverse judgment might derail its plans. Incidentally in some quarters, the current hearings are being viewed in the context of the hard bargaining that might be going on between the DMK leadership and the ruling BJP at the
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Output Saving and Digital Domain

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Both production and consumption no longer resemble what we have envisaged them over last 300 years or so. As we begin the third decade of the 21 st century, the economic universe is stark in it contrast to its look a mere 80 or so years ago. Simon Kuznets and team ‘invented’ the concept of GDP in 1937, yet eight decades down the line, the limitations of the same are getting becoming ever more visible. The answers lie in the emergence of what one terms the information revolution. Internet and subsequent rapid diffusion has touched upon daily lives in many ways. Manifest is the new theoretical discussion on the role of production and consumption in microeconomic literature.   Economics functions on the notion of scarcity. Implied is constant endeavor to produce goods using lesser and lesser resources. In production analysis, isoquants represent locus of all combinations of inputs producing same level of output. Derived from the same is the idea of least cost production. Factoring
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