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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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Elections- US and India- Two Takes

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  The US elections of 2020 seem to add a new chapter in their history. The way they seem to conduct elections is hardly an advertisement for the world’s most powerful democracy. Over the last nearly two hundred and fifty years, they have been conducting elections, yet the complaints of manipulation, fraud, extension of voting times, counting delays, and contested ballots do not seem to have gone away. It might be anyone’s game at the time of this writing but what the elections are manifesting is not per se democratic exercise but an outcome driven by the machinery of the state in question. Stealing an election of course in the US is not something unusual but each occasion, it traverse new distances. The memories of the 2000 battle fought in Supreme Court over Florida is still fresh in the mind. The 1960 victory of John F. Kennedy too is attributed to the manipulation that happened in Chicago.   The US elections of 2020 was not just an ordinary battle. It was essentially a battle be
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Geopolitical Case against Vaccine Nationalism

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  Europe is facing a second wave of infections resulting from the Chinese virus. While the mortality rates are relatively lower compared to the first wave in March, the sheer infectiousness is very high. The US is yet to recover even from the first wave and the Presidential election campaign seems to have increased the infections. India on the other hand is seeing a decline in both infections as also the death rate. The positivity rate is coming down with some green shoots being visible. There is no room for complacency though. The festival season is on in India. The social distancing norms and the mask norms are routinely violated and given the Indian population becomes difficult to implement beyond a point. The ongoing election campaign in Bihar and other states is also likely to have an impact. Maybe India has to wait till early December before some it can be said with some definitiveness that India has past the peak decisively.   Meanwhile, the vaccines against the Chinese viru
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What's in a Name?!

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  “Whats in a name?” is usually attributed to Shakespeare. Yet in the name lies the identity of the character, identity of the place, identity of the person and more. It is for a name that agents fight. Noted economist Stephen Levitt dedicates an entire chapter on naming preferences in his best seller Freakonomics. To him Levitt, name is an aspiration and perhaps manifests a response to an incentive. Parents’ name their children after their role model, one whom they seek to emulate. The name of successful character is what is sought to be named to many a kids born in their era. Names undergo a change with passage of time. If the names denoting God and Goddess dominated the Indian landscape for many years, it is the modern trends and the names associated with these trends that dominate the current era. A part of Pakistani problem in identifying with terror is something decoded through the names the parents keep their children in that country. In fact, the naming trends indicate several
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Presumptive Loss and Price Discrimination

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  The Delhi High Court is hearing the appeals of the Union of India against the acquittal of all the accused in the notorious 2G scam case. Among those in the dock are DMK leaders like Kanimozhi and A. Raja the then Union Minister. The hearings on these appeals are likely to get over by early November with the judgment likely to be out by the end of this year. The political ramifications of the judgment would no doubt be felt. Given the approaching elections to the legislative assembly in Tamil Nadu, the opposition DMK would sitting on razor’s edge awaiting the judgment. In some ways, if the accused are convicted, this could have certain implications for the succession planning within the DMK. DMK might be in an advantageous position going into the elections, but an adverse judgment might derail its plans. Incidentally in some quarters, the current hearings are being viewed in the context of the hard bargaining that might be going on between the DMK leadership and the ruling BJP at the
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Mathematics, Tharoorisms and Prisoner's Dilemma

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  A few days before, came across an interesting tweet. This tweet is available here . The tweet links to an article that talks about jargons and their usage in everyday life. The author in the article points out that research indicates, the use of jargons at every second instant reflects a case of insecurity and not academic learning or competence.   Therefore, one would wonder, why people resort to jargons and high sounding words at the drop of the hat. Of course, people like Shashi Tharoor or Manish Tiwari seemed to master that. Therefore, it would be pertinent to decode the logic behind using Tharoorisms so as to speak in the everyday life. If one goes further, there is a tendency among the social scientists to increasingly resort to mathematical formalism of late. Interestingly, the mathematical formalism only makes the concept more complex than demystifying it. Unless the goal is to make the concepts or language complex, there seems to be no reason why one should use it. Yet peopl
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Economics and Signalling: Beauty and Ownership of Durables

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  There is without doubt a fascination in many to look or appear beautiful or handsome. They want to score one up over their family members or friends or those in the social circle. There is no doubt an attraction towards spending on beauty products like cosmetics or dresses. There is further an attraction towards owning latest electronic gadgets, a keen inclination to own a car or at least a two wheeler, an innate desire to own house preferably in an upmarket belt, a tendency to possess and wear jewellery different from the rest. All these are instances which one observes around them in everyday life. To some it might be a necessity, to some it might be an aspiration, to others it might be fulfilment of desire to square up with their prospective rivals so as to speak. Yet in each of these actions or movements towards those actions, underlies a concept that is innate to economics. While as perceived from outside, economics might appear abstract, but as the explanation for these phenome
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Economics Applications- Examples from Intellectual Property Rights

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  Many past posts have discussed the applications of economics concepts and principles in different facets of life. It has been argued often that the applications are perhaps sub conscious but nevertheless can be theorized. There are often applications that can be theorised through economic thinking while rationalising those actions. The current post will seek to delve into the intellectual property rights (IPRs) and how their application gets rooted in economics. While IPRs need an engagement at depth, the current post will limit to a few examples that highlight the economics at work.   Ever-greening of patents In 2014, the Supreme Court of India invalidated the patent on Gilvea, the anti-cancer drug developed and marketed by Novartis. The patent on the drug had expired in 2006 but the pharma giant wanted to extend the patent. It had made use of the application of the concept of ever-greening. Patents are an outcome of a trade-off between short term and long term prospective rew
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