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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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Consumption-Investment Dynamics and the Budget

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  The Union Budget for the financial year 2021-22 is to be presented to Parliament in less than a month from now. The focus would be on the stimulus the government would give to different sectors as they seek to recover from the lockdown induced by the Chinese pandemic. The focus of the government in 2020 would have to be ensure the firms and households remain solvent during the pandemic lockdown but as the vaccinations are underway, there would be direction necessitated for revival of the economy. The economy must shed the past and look towards the future. An important indicator would be however the boost to the consumption. The economic revival in India has to pick either through a growth in consumption or growth in investment. The government expenditure has ensured the economy remains stable in turbulent times and has saved further blushes for the economy. it is time to revive the other components of aggregate demand.   Investment is sought to be increased through Atmanirbhar pr
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2020 in Retrospect

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  The year 2020 is about to fly by and we are welcoming 2021. As with any year, there would obviously be optimism as one welcomes 2021. The outgoing year has not been memorable across the human mankind. It might be one of those years which would be best left forgotten. The year 2021 is beginning with optimism and one hopes the challenges facing the existence of human mankind are overcome and a new beginning emerges. The year 2020 too was welcomed with optimism but somewhere along Wuhan in Hubei province of China, a virus was sweeping around claiming victims as it spread its tentacles far and wide. It was not that the rest of the world did not know, what perhaps was unknown the magnitude of damage it was inflicting across the city of Wuhan. China could have alerted the rest of the world but as with any other Chinese thing, they chose to remain secretive. It was a potential ruin event, to borrow from Taleb, but the World Health Organization (WHO) instead of alerting the rest of the world
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Long Tail of Indian Tourism

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  One of the earliest campaigns of the Modi government elected in 2014 was the Incredible India campaign. It was an attempt to draw tourists from across the world into exploring different facets of India. The facets are not merely historical monuments but would extend to wildlife sanctuaries, national parks, beaches, old temples, historical places, snow clad mountains, trekking routes, mountain drives, river rafting, island exploration, cultural exploration, sartorial tourism, to just sample a few. It again was not merely about few landmarks but drawing across the country from the snow clad mountains of Kashmir, Ladakh, Himachal Pradesh to Uttarakhand to the hill stations in the Himalayas to the Nilgiris, from the beaches of West Coast to the distant beaches of the East Coast to just sample a few. The campaign was of course a moderate success, yet its success could be measured only in the long run. The shift in consumer preferences take quite a bit of time. what added to the woes was t
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Celebrities in Politics

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  The news emerging from Tamil Nadu is a sort of anti-climax for those who believed some churn happening in Tamil Nadu post the entry of noted film star Rajinikanth into politics. The much awaited entry of Rajini as he is known has turned into a non-starter. Ostensibly on the advice of doctors, Rajini has decided not to venture into politics. For all the suspense he had created and the air of intrigue that was built over, it seemed everything was perhaps speculating in the air. The forthcoming Tamil Nadu elections will be the first after the death of two stalwarts Jayalalitha and Karunanidhi who strode over the state politics for decades. The AIADMK was struggling with the current leadership yet to gain acceptability while Stalin is facing his first independent test in the Assembly elections. With the DMK having a clear edge, Rajini was expected to turn the things around and bring about a new direction in Tamil Nadu politics. He was an outsider whom his fans believed could turn the sha
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Reclaiming Lost History

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  In a previous post “ Saffron Swords ”, there was an attempt to review the book by the same name. The book sought to collate together the stories of those known and unknown fighters who put their lives at stake in defence of the motherland. They might have fought against the British or they might have fought against the Sultanate and their successors, but they did not shirk away from fighting to protect their independence. As the book argues, contrary to the popular perception, neither the Islamic invaders nor the Europeans had an easy time in managing India. They were faced with resistance at every nook and corner and in many instances, the victory they obtained was perhaps pyrrhic. Interestingly, barring the Mughals, there was hardly an Islamic dynasty that had a long uninterrupted rule either in Delhi or in other regions. Maybe the Bahamans would come close but they never had uncontested supremacy with them being constantly challenged and often outpowered by the Vijayanagara rulers
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Notes on Inflation

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  Inflation is a continuous increase in the general price level. It measures the changes in the price level in the economy. If the firms desire a stability in price, the price levels must remain stable. Therefore, an eye on inflation figures is no doubt important for any manager or an entrepreneur. For the inflation to be measured, there must be a construction of general price level. Generally, there are two measures that are constructed for general price level. Going back to the circular flow model, there are two actors, the firms and the households in the economy. Firms produce goods and services which the households consume. The firms sell goods at certain prices and the households consume the goods at certain other prices. There is a difference between the prices at which the firms sell and the prices at which the households consume. Therefore it becomes important to know which prices have to be taken for constructing a general price level. In all cases, price levels are constructe
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Deciphering Judicial Overreach

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  Article 142 of the Indian constitution provides for enforcement of Supreme Court decrees. The cause was the carriage of justice. If the victims knock at the court of justice and if justice is delivered, it has to be enforced too. Therefore, the judiciary must have the power to enforce its orders. Thus arose the need for Article 142. The lower courts while having the power to enforce their decrees are also subject to the review by their higher courts. Since Supreme Court is the highest judicial body in the country, naturally its decisions are not subject to review unless it takes up its own review. Secondly, even though justice might have been delivered on paper, it needs to be enforced on the ground. For instance, there is an eviction order, but the person refuses to leave the property. So in this context, the constitutional backing allows the judiciary to enforce its orders anywhere in India. Yet, with the passage of time, there exists a possibility of the Supreme Court overreaching
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