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Showing posts with the label tastes and preferences

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

Tastes and Preferences in Economics: Some Notes

  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