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Showing posts with the label perishable goods

Decision Making as Output and Bounded Rationality

  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

Real Life Applications of Economics: Some Examples

  There are many past posts wherein it has been attempted to explore the applications of economics in real life. Many textbooks as noted before, posit economics in abstract terms. Yet, at every stage of life, one finds subconscious applications of economic theories, concepts and models in real life. It is often conceivable that the agent is unaware of economics and is only applying what is common sense. Yet, economists theorise this common sense. In continuation with the past posts on economics and its real life applications, the current post will take a few more examples to illustrate the same. Real Life Practice/ phenomenon     Economics Linkage Rise of Brands Firms operate in the normal course, in theory, in a perfect competition. In perfect competition, goods are homogenous, firms are price takers and thus have no control over the price. They have control only over the output. Yet firms seek some degree of control over the pr