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Showing posts with the label populism

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

Blockbuster Populism

Often we see populist policies getting all round support from political parties. There are number of instances wherein pieces of legislation perceived to be good economics get defeated or withdrawn. Is it merely perception of something else at work. I've my own take on this. We need to understand this apparent paradox through Game Theory and Prisoner's Dilemma. More on this here