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Showing posts with the label resource allocation

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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Market and Non-Market Streams of Thinking: Some Thoughts

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  The economic theory and thinking revolves around two poles. One is often termed the economic right borrowing from the political conservatism and secondly the economic left borrowing from those subscribing to the Marxian line of thinking and related to the political left. However, these poles are not water-tight. There is of course however wide streams of thoughts that fall in varying shades of right and left. In fact economic thinking far from being a water-tight compartment operating in silos is actually a spectrum offering shelter to varying streams of thought. These streams of thought give rise to numerous possibilities in understanding human behaviour. Moreover, these streams of thinking offer insights to the complementarities and conflicts between the various modes of thought.   Those who subscribe to the spectrum of right wing economic thinking favour the primacy of the markets in allocation of resources. Those who advocate the left stream of thinking normally favour the pr
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Economics and Policy Design- Right to Education

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The Right of Children to Free and Compulsory Education Act, 2009, popularly known as the Right to Education (RTE) Act, came into being in India from April 1, 2010 and is expected to lead to revolutionary change in the education delivery through schools in India. RTE mandates e very child from 6 to 14 years of age has a right to free and compulsory education in a neighborhood school till completion of elementary education. The economics of education rests on the fundamental premise of education being an investment.   Education is a good and has social benefits.   But pricing of education leaves the population groups unable to afford these fees outside the system. The market failure is visible and the government has to step in. There are four ways in which the government can influence the allocation of resources. In his celebrated ‘Code’ Larry Lessig presents the modes of Law, Market, Norms and Architecture to ensure the allocation or non – allocation of a resource. Let us tak
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