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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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Behavioral Changes, Online Shopping and Chinese Virus

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  The pandemic from China certainly has set in motion certain behavioral changes conceivably an unintended consequence of the same. The need for social distancing and the urge to avoid crowds make people think alternatively to meet their needs. Shopping is turning increasingly online so would be the food deliveries. People visit eateries to enjoy and experience. Yet the same experience for instance is to be missed given the prevailing lockdowns that have become part and parcel of life in the last thirteen months and so. The people would have to opt for the second best option perhaps, the online food deliveries. It is not that the people were not accustomed to online shopping for their grocery needs, their daily vegetable and fruit needs, their daily needs for food from eateries and of course expanding to consumer durables to books to CDs to clothes and what not.   The pre-pandemic online buying behavior was driven by demographics. It was generally the young who felt these things we
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The May Day

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  May Day celebrated on May 1 every year has two different associations. The first one has pagan origins later adopted by the Church and is a traditional spring festival in many parts of Europe. The more famous and better know is about the International Workers Day and celebrated as a holiday in a number of countries. In fact, the May Day was perhaps the most important of the holidays in Communist countries like the erstwhile Soviet Union, Maoist China or even present day North Korea. It represents the worker’s efforts in seeking to improve the conditions for workers. Its origin goes back to 1889 when the Second International decided to adopt the same. In fact, the US adopted the Labour Day to be celebrated on the second Monday of September and predated the Second International’s adoption by a few years. In fact by 1894, it had become an official holiday in the United States.   Aside of United States, the celebrations were reserved for the first day of May. The seventeenth century
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Why Government Has to Provide Public Goods? No Private Army or Police or Justice System!

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  Economics literature recognizes the differential nature of goods. Each good is unique in itself. It must be pointed out that in economics, good is something than enhances economic welfare while bad is something that reduces economic welfare. For practical reasons, one can assume economic welfare to be equivalent to social welfare. Secondly, contrary to public perception about distinctions between goods and services, economics literature clusters both of them into goods (the singular of which is good). The past post “ Examining the Nature of Good ” went to certain depth in examining the nature and classification of goods. The current post would seek to build up on the same and strive to understand why certain goods are provided in the market whereas certain goods are offered only by the government. In theory, nothing prevents the private sector from offering every good, or in other words converting each good into either private or club good. Similarly, nothing prevents the government
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Self Interest, Lock-ins and Encyclopedia Britannica Story

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  Firms have a configuration of assets, resources and market positions which are often unique. They are something that cannot be translated into other contexts easily. Once a market position is obtained, it becomes difficult to reposition the firm. Similarly, the assets are configured to a certain market position and are aligned to work in pursuit of the interests of the market position thus obtained. This is precisely a reason why many firms fail to make the cut when faced with technological changes. There might be a strong innovation culture yet the ability to commercialize might be constrained because of the configuration of assets and resources. For instance, Xerox set up the Paolo Alto Research Centre (PARC) to work on the avante garde technology and did manage to do very impressive work in terms of technologies developed. Yet none of them could be commercialized by Xerox. In fact, while many technologies have gained significant traction in the market, they are hardly associated w
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Indian Economy and COVID-19 Second Wave

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  The challenge in the second wave of the coronavirus orginatiing in China is managing the economy. In the previous instance of the first wave of 2020, India had gone in for an early lockdown when the cases were hardly in double digits. India had perhaps one of the strictest lockdowns in the world. This certainly managed to contain the wave and slow down the spread. The peak came something later around mid-September, partly causes by the increased flow of migrants across the country. The gravity was essentially a result of mismanagement in contact tracing by states like Maharashtra and Delhi. The lockdown took a heavy toll on the economy. The economy crashed to fall nearing 25% yoy. The lockdown also led to the recession for the first time in India. The economic scars is something government wants to avoid this time around. The economic impact and consequent social transfers led to the fiscal deficit hitting close to 10% of the GDP. There is of course a question whether India would be
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Copyright Day, Enforcement , and Demising Returns

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  April 23 is celebrated as the World Book and Copyright Day. It marks the commemoration of the birthday of William Shakespeare. It is moot whether the Bard of Avon was born on this day, but nevertheless, there is a celebration and this is associated with the books and the ideas behind those expressions in the books. Books are expression of an idea that is sought to be conveyed by the author. The idea needs protection since anyone else can steal the idea. Yet ideas can arise independently to many of them. The way they might express would be different. For instance if someone were to express an idea through a book, somebody might convey the same idea through a movie or they might be a musical composition seeking to project the same idea. A story might be told to the audience, yet when asked to write down the story or orally retell the story, each member of the audience might convey in different style and form. Therefore, while the underlying might be the same, the way in it is expressed
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Modi and the Second Wave of Chinese Pandemic

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  India is in the grip of the second wave of the pandemic induced by the virus originated in China. The cases are hitting records which were unseen in the previous wave. India has now recorded more than two thousand deaths per day. Though the death rate is lower relative to the first wave, the fact that deaths happen around a week or two after testing positive cannot be ruled out. Therefore, it would be premature to discuss the deaths in comparison to the first wave. There has been a lot of talk about the reasons for the second wave. While there might reasons one too many, what cannot be discounted is the fact that once the wave strikes, there is very little one can do other than cessation of economic and social life. Britain has been able to come out of the second wave thanks to the lockdown accompanied by the rapid increase in vaccinations. Europe is still in the grip of the lockdown. It seems inevitable that India too would have to go in for a lockdown.   One of the reasons why
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