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Showing posts with the label revealed preference

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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Economic Logic of the Silent and the Shy Voter

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  In politics and elections, there is often a talk about the presence of a silent voter or a shy voter. There is a belief that these voters generally remain silent about their preferences, do not voice any opinion on the same and cast their votes silently for their candidate. These silent votes if large in number can affect the forecasts of the pollsters. This is because of the silent or the shy voter refusing to participate or reveal their choice to the pollsters. Very few pollsters might be in a position to capture their choices.   It is usually believed that these voters belong to the subaltern classes or castes or those groups who are usually outside the power circles. They fear reprisals if their other caste or class groups learn about their choices. It is a different matter that an idea could be obtained on their voting preferences post the election results but that is another story. In India, it is usually believed that the voters of parties such as BSP do not reveal their c
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Tastes and Preferences in Economics: Some Notes

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  Tastes and preferences are determinant of demand. The changing taste and preferences determine the changing patterns of demand. If there were to be demand creates supply, it would be reflected through the changing tastes and preferences. An instance would be in order. On September 11, 2020, it marked nineteen years since the two aircraft were hijacked to crash into the World Trade Centre Towers in New York. The Western world was brought to the reality of the gory Islamic terrorism. It is a different matter that war against Islamic terrorism still continues and at times it seems to happen in spits and bursts and not apparent conviction behind the same.   Yet aside from it, was the trauma it created in a whole population in the US. The Americans were terrified without doubt. There were scared to move out, to interact and many having lost their near and dear ones plunged into depression and loneliness. There was certain change in the purchase patterns in the US. Many Americans began
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