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Showing posts with the label framing

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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Real Life Economics and Home Purchase Industry

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The past posts have delved on different instances wherein economics can explain the real life phenomenon. As noted earlier too, many instances we encounter often have an underlying economics angle to them whether consciously or subconsciously. To an economics graduate seeking to apply theories learnt during the course into real life, the posts offer a structured way of implementing the same. Yet many who might not have taken economics as a subject but still would have applying the concepts into their daily life thanks mainly to the life experience curve. The current post takes the past forward into understanding examples from the real estate, construction and the housing industry.   There are many factors that determine the demand function for purchase of a flat or a house. The hedonic attributes might vary from location to the size of flat or house, the built up area, the area available outside for aesthetic or utilitarian purposes, the price of the land, the neighbourhood, the di
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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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