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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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Ramayana on DD and Popularity: Some Notes

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The re=telecast of Ramayana on Doordarshan during the lockdown has seen record viewership. Reports indicate 78 million views making it break many records. Doordarshan which had become just another channel for many years has re-emerged as a Star. The increasing popularity of Doordarshan has demonstrated an interesting example of what one was a ‘Dog’ in BCG parlance getting converted into a ‘Star’. The context and position does result in changes. This at some level suggests the static BCG matrix analysis of product portfolio simply flies in the air given the dynamic nature of business, social, cultural and economic topography.     Aside of the BCG matrix, there are interesting pointers from the angle of economics of such a viewership. What makes an old televised portrayal of the epic Ramayana click some 35 years after it was first telecast? It is obvious that the lockdown meant most people were at home and the idiot box was the best way to pass time. Doordarshan capitalized on the
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Will the Indian Lockdown Create Inflationary Tendencies?

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Some studies indicate a possibility of high inflation even in the excess of 10% within the next year. The expected inflation as per the surveys seem to point towards a jump of 3-4%. Interestingly, there is a divide among the economists over the after-effects of the Wuhan pandemic. The world having locked down for more than a month has without doubt created economic disruption both through Aggregate Demand (AD) and Aggregate Supply (AS) There has been an induced halt to aggregate demand with a similar restriction on aggregate supply. Furthermore, even with the lifting of lockdown, the propensity to self-protect might make prospective consumers wary of shopping thus lower AD. At the same time, the reluctance of the workers given the risks associated with the job tasks might make them skip from work thus adding to constraints in AS. Therefore an analysis would be worth pursuing over the likely inflationary impact or otherwise of the economic shutdown caused by the Wuhan flu. There
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Blake Moulton Grid and the Unconditional Economy First Advocacy

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The issue of extending lockdown or reopening of the economy continues to border on rhetoric than substance. There are a few who hold an extreme view of complete reopening of the economy while few advocate the lockdown. At times, it seems rather than the individual judgment, it is the views of their ideological mentors sitting thousands of miles away from the location that determines the views. In India, many state governments notably ruled by the opposition parties are clamouring for an extension of lockdown. This makes the usually vociferous right wing activists on social media see red on any news of possible extension of the lockdown. Their views that India needs to open up fully arises from the fact of the need to oppose the views of the political left and so-called political liberal.   The debate on the feasibility of economy first or the health first has been discussed in this post .   The analysis is underpinned on the classical societal dilemmas of allocation of resources the
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Public Expenditure and Revenue in Times of Pandemic- Some Notes

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The last couple of days is abuzz with a report from the young officers of Indian Revenue Service (IRS) over the proposed taxation measures to overcome the fiscal crisis likely to be created by the extended lockdown. The measures among other things proposed a reintroduction of the wealth tax, an inheritance tax and increased taxation beyond the current 40% for the super-rich. As expected, it has created a furore in the social media. While the government has expressed its reservations on the proposal, the right wing economic conservatives seem not to let down the opportunity of having a go at the proposals. At the same time, the government reaction is making the left led economists and politicos crying foul over the back down and seeking to project government as anti-poor and under the influence of the super-rich. In between the extreme poles, there seem to be many good suggestions that are being given a go-by. While the analysis of the proposals can be undertaken, it would be instruc
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Wuhan Pandemic, Fatality Rate and Statistical Determinants

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The post “ Investigating Wuhan Pandemic Spread and Determinants ” discussed the statistical determinants of the Wuhan pandemic. The analysis used the death incidence as the dependent variable and tested its susceptibility to changes in different independent variables. A couple of interesting pointers emerged. The first was the significant differences in death incidence between advanced economies and emerging or underdeveloped economies. One of the possible explanations was the probability of deaths being attributed to several other causes rather than Chinese virus induced Wuhan flu. There was a possibility that cases were being under-reported and deaths occurring were delinked from the COVID-19. Secondly, contrary to arguments by experts, there was no significance of BCG vaccine programmes on the death incidence. This was little puzzling given the opinion of experts. In the meantime there are anecdotal notes about the impact of temperature on the incidence of coronavirus. It is
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Kiranonomics !

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Across the world, the economy has come to a standstill. Few exceptions might exist however, indicators like declining oil prices (negative futures), decline in shipping, and restrictions on sale of non-essential goods remain in place in most parts of the world.   India too is no exception. India was one of the frontline markets for e-commerce and supermarkets. In India over the last couple of decades, there was a movement from the unorganized kirana retail outlets to an organized retail outlets comprising of super markets, hyper markets, malls among other things. In the emergent context, these super or hyper markets too were facing challenges from the rise of the online e-commerce giants including Amazon, Flipkart (acquired by Walmart) among others. The spread of the organized retail both offline and e-commerce did not confine merely to the few upper income groups and demographics in urban areas but pervaded deep into the semi-urban and rural clusters as also the urban low incom
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Economic Tidbits of Sporting Events

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Sporting events attract fans and fan loyalty. As a matter of fact, across countries and provinces and towns sports can be great unifier and great divider. It is a paradox of sorts yet a fact. There is a loyalty towards a team and as the two teams or two individuals compete for a prize in their sporting event at different layers, the loyalty translates into an emotional outpouring of support which in itself is competitive. The emotions that come out from the rival supporters create divisions often difficult to heal at times. Each sporting event is a competition for a trophy. The trophy is inelastic conceivably to a large degree. There is just one prize on offer and just because many compete, the number of winners on offer doesn’t increase. The winner gets the rewards disproportionate to the others and thus most sought for. This operates at every layer. Even in the schools, the inter-school competition within the city or the sub-district or the district are the most sought after.
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