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Showing posts with the label self-interest

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, Collective Interest and Evolutionary Biology

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  Market economics is based on the foundations of Adam Smith theorising the ‘Invisible Hand’. To Smith, it was an individual’s pursuit of self-interest that lead unintentionally to collective interest and thus enhances social welfare. Of course, the term social welfare was an innovation that came decades later after Smith. Many economists have built their models and theories based on the Invisible Hand paradigm. There are no doubt many examples of the same. For instance a cab driver comes to pick up after travelling for 3-4 kilometres not because of his benevolence but because of his self-interest, his interest in earning daily bread, his interest in stepping to higher levels of income. A hotelier would keep the restaurant open even in times of pandemic not because he or she cares for the hunger of the people but for their own interest in earning and sustaining their daily bread. E-commerce delivery agents functioned in the pandemic partly because of their self-interest rather than an
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The Consequences of Woke Individual Liberalism

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The piece Diminishing Returns of Woke highlighted the counter reactions emerging towards imposition of wake culture. Political backlash is pretty visible, the backlash is spreading down to lower echelons of the society. Yet instances are being reported of woke liberals engaged in a witch hunt on the deviants from the alleged woke line. The case of an Ola driver to doctor in Kerala to an earlier instance of chef in the Gulf are pointers towards ‘micro-Dreyfuses’. An unpopular view of the same, however unfortunate it might be, is there will be victims of this battle. Foot-soldiers often pay the price and perhaps of higher magnitude in relative terms. Yet the cost of witch hunt would be significantly higher for woke liberals. To a woke liberal, long run success would be of conversion of ordinary human towards their side and if not at least not push him or her to the other side. This collective interest is at odds with the individual self-interest of woke liberal. He or she wants t
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