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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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Logic of Free Revealing of Information

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Erich Von Hippel in his splendid appraisal of innovation reasoned home innovation or user driven innovation constitutes a critical yet discounted component of the innovation process.   The users as they innovate in their ‘home’ or ‘office’ environment deliver valued service to the firms. Given the heterogeneity of needs, it is difficult for a firm to produce personalized or customized goods without a trade-off on price. Therefore the biome compels the users adapt the standardized offering by tinkering with these products to suit their localized contextual needs. In doing so, they emerge as lead indicators of the demand patterns for the goods and physiognomies of the goods. In a previous piece http://stalkingtheory.blogspot.com/2020/01/output-saving-and-digital-domain.html , quoting Lancaster, it was argued that the individualities of the good rather the good itself engendered utility to the user. Therefore, it is vital for the firms to decode the user needs thus making available th
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Economic Theory of Partition

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As the world welcomed 1947, the clouds of partition hung around the Indian sky. Jinnah’s intransigence coupled with Congress obduracy to bow to Jinnah’s demands resulted a standstill. To borrow from game theory or chess, it would have been uneasy existence, a cold war but Muslim League had different ideas. Violence was low cost option for breaking the standstill, and therefore riots intensified after the Direct Action Day. Authority collapsed in many places leading to a free for all in some areas. India was on throes of a civil war that might perhaps last more than Byzantine Ottoman War in the Middle Ages. Despite pretensions of neutrality, the British were more than sympathetic to the idea of Pakistan. The roots of British-Jinnah nexus could be traced to the events in the declaration of Second World War and the subsequent Congress reactions to the same. A this stage it is suffice to state heading to 1947, Indian constitutional formation was in a limbo, no agreement on the anvil ove
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AAP Dilemma Revisited!

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Delhi elections are back. It might be an election for a glorified muncipality, yet being the national capital attracts maximum noise. The LS elections of both 2014 and 2019 saw clean sweep by the BJP yet the VS election of 2015 saw clean sweep (almost!) by the AAP. The elections to the local bodies saw convicing BJP victory. It perhaps points to split voting. One has to wait for the verdict of VS'20 to know the future trends. Yet a peek in history is worthwhile. I had attempted to analyse the rise of AAP in the wake of verdict of 2013 VS elections. For more on the same, one can read @ https://t.co/aKH3y2bNGj?amp=1
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Output Saving and Digital Domain

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Both production and consumption no longer resemble what we have envisaged them over last 300 years or so. As we begin the third decade of the 21 st century, the economic universe is stark in it contrast to its look a mere 80 or so years ago. Simon Kuznets and team ‘invented’ the concept of GDP in 1937, yet eight decades down the line, the limitations of the same are getting becoming ever more visible. The answers lie in the emergence of what one terms the information revolution. Internet and subsequent rapid diffusion has touched upon daily lives in many ways. Manifest is the new theoretical discussion on the role of production and consumption in microeconomic literature.   Economics functions on the notion of scarcity. Implied is constant endeavor to produce goods using lesser and lesser resources. In production analysis, isoquants represent locus of all combinations of inputs producing same level of output. Derived from the same is the idea of least cost production. Factoring
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Primer on Statistics -I

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Pervasive phobia of numbers is complicated by the pedagogical approaches bordering on the abstract towards mathematics, statistics and related subjects. Yet, many concepts or the principles underlying the concepts can be understood without resorting to numbers. There are two dimensions in understanding statistics. The first is conceptual understanding or the significance of the test, or and statistical principle. Secondly, it is the operational element- the use of the same in practice. The latter is emphasized through the pedagogy and obviously needs mastery of numeric. Yet, without the former, very little progress can happen in the latter. The conceptual understanding is possible without resorting to any sort of numerical gymnastics by taking refuge in principles navigated consciously or sub consciously in day to day life. It makes sense to construct a tabular model to understand the conceptual applications of various statistical tools. Statistical tool/ test/ measu
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Political Bodyline of the Indian Left Liberal

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The authoritative verdict of 2019 meant that post Nehru 1957, PM Modi was the first to win a back to back elections with increase in both seats and vote share. To the edifice fabricated at connexions of Marx, Nehru and Mohammad, the shock magnitude was high. The follow up surgical strikes in Article 370, Ayodhya judgment and grant of accelerated citizenship to persecuted religious minorities seemed insult to injury.   Faced with an existential crisis, it was inevitable to see a spill-over of emotions onto the street, the outcome being full view in the last month and half or so.   While Mamta was first off the block vowing to prevent CAA being implemented in her state, the competitive pursuit ensured Kerala go a step forward to have its assembly pass a resolution opposing the implementation of CAA. Many other states opposition states have joined the rhetoric notwithstanding CAA is central subject and states have no role in the same. Contrast to Tukde Tukde slogans in the previous JNU
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Indic Cultural Exports: Way Forward

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Cultural exports, numerous shortcomings apart, defined both US and British successes positioning them as a sort of aspirational society at different points of time. Interestingly at one point of time, French was a symbol of elitism in British society. To enhance the chances of upwards social mobility in British milieu, one had to speak and act French. It was not unlike Urdu of current Indian liberal elite described in the piece “ Urdu and Anti-Establishmentarian Movement: Dominant Strategy ”. Within a century or so, Britain could turn the tables around and emerged as the cultural superpower across the world. While Britain might be in a terminal decline, its colonial hangover lies in the cultural sphere where its bouquet of creations still pervade across the world. From dress sense to cricket to hill stations to way of life, British cultural creations perhaps stood way above the rest.   US as it expanded into a military superpower developed its own complement of cultural offe
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