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Showing posts with the label structural break

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

Behavioral Changes, Online Shopping and Chinese Virus

  The pandemic from China certainly has set in motion certain behavioral changes conceivably an unintended consequence of the same. The need for social distancing and the urge to avoid crowds make people think alternatively to meet their needs. Shopping is turning increasingly online so would be the food deliveries. People visit eateries to enjoy and experience. Yet the same experience for instance is to be missed given the prevailing lockdowns that have become part and parcel of life in the last thirteen months and so. The people would have to opt for the second best option perhaps, the online food deliveries. It is not that the people were not accustomed to online shopping for their grocery needs, their daily vegetable and fruit needs, their daily needs for food from eateries and of course expanding to consumer durables to books to CDs to clothes and what not.   The pre-pandemic online buying behavior was driven by demographics. It was generally the young who felt these things we