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Showing posts with the label lock-in

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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Self Interest, Lock-ins and Encyclopedia Britannica Story

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  Firms have a configuration of assets, resources and market positions which are often unique. They are something that cannot be translated into other contexts easily. Once a market position is obtained, it becomes difficult to reposition the firm. Similarly, the assets are configured to a certain market position and are aligned to work in pursuit of the interests of the market position thus obtained. This is precisely a reason why many firms fail to make the cut when faced with technological changes. There might be a strong innovation culture yet the ability to commercialize might be constrained because of the configuration of assets and resources. For instance, Xerox set up the Paolo Alto Research Centre (PARC) to work on the avante garde technology and did manage to do very impressive work in terms of technologies developed. Yet none of them could be commercialized by Xerox. In fact, while many technologies have gained significant traction in the market, they are hardly associated w
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