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Showing posts with the label implied demand uncertainty

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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Formula Bollywood, Retail and Implied Demand Uncertainty

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  The past posts have often portrayed the applications of economics in real life. To stress the obvious again, economics is far from abstract. There is inherent application of its concepts in day to day life. Often the application might be sub-conscious or maybe many a times, the applications find themselves convenient to be theorized. Theory flows from evidence and theory created has to be backed by evidence. Maybe it is a typical chicken egg problem but nevertheless, makes economics attractive. Contrary to many economists who portray a dull life for an economist, in reality, the applications of economic theories in every aspect of life can make the subject very colourful. In continuation of the past analysis, the current post too takes up a few more examples to illustrate economics in real life or what Robert Frank would call economic naturalist.   Let us take the instance of the film industry, India in particular. The Indian film industry thrives on remaking the Western films in
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Indic Cultural Revivalism and Invisible Hand

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India is a land of myriad traditions. Each town or village has its own traditions and rituals often associated with deep history. Some rituals find themselves bounded in space of caste or region while some expand into multiple geographies and psychographics. With passage of time, some experience the Darwinian survival while many fall by the wayside to the vagaries of evolution. Some find themselves taking a rebirth on account of many factors, incidental or deliberate. As the people move across regions and countries, they take their traditions and rituals with them thus giving them a new lease of life. In recent years, India has seen an explosion of sorts with respect to revival of many traditions and in unexpected geographies and demographics.   There are many reasons for the same some of which would be useful to be decoded. Firstly, it has to deal with internal migration and cross cultural marriages. As people marry across castes and regions, the traditions find themselves intermi
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Logic of Free Revealing of Information

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Erich Von Hippel in his splendid appraisal of innovation reasoned home innovation or user driven innovation constitutes a critical yet discounted component of the innovation process.   The users as they innovate in their ‘home’ or ‘office’ environment deliver valued service to the firms. Given the heterogeneity of needs, it is difficult for a firm to produce personalized or customized goods without a trade-off on price. Therefore the biome compels the users adapt the standardized offering by tinkering with these products to suit their localized contextual needs. In doing so, they emerge as lead indicators of the demand patterns for the goods and physiognomies of the goods. In a previous piece http://stalkingtheory.blogspot.com/2020/01/output-saving-and-digital-domain.html , quoting Lancaster, it was argued that the individualities of the good rather the good itself engendered utility to the user. Therefore, it is vital for the firms to decode the user needs thus making available th
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