Property Rights Thesis Statement: “The Human Rights and the Property Rights are the rights endowed to human, with the order as being followed former being numbered amid the latter. The property right school of economics belief is a dovetail of neoclassical and institutionalist” Property rights are contrivance and should not be misconceived as the Economic Policy in themselves. The ideal structure as propounded in an exchange economy exhibiting the behavior of imperfect information. In this review, the views of SEN, ARROW and RAWLS have been emphasized and thus the analysis is interpreted. Thesis Objective: “.
Rational Choice Theory, in layman terms sees people as maximizers of self-interest who engage in a cost-benefit calculation to achieve a better outcome over a worse one (Lim, 78). The self-interest of an individual is subject to change, based on the surrounding conditions. This is further explained by the assumption that rationality can be institutionally, culturally or socially defined (Lim, 82). Hence, it can be said that rational choice theory takes into account the effect of the environment on the decision making capability of an individual. This is also referred to as the ‘’thick variant’’ of rationality and using this variant enables this theory to be applied on both micro and meso-levels.
Equilibrium: Classical and neoclassical definitions of equilibrium are fundamentally different. In classical economics, equilibrium occurs when (given) savings are equal to investment. Equilibrium is a function of exogenously given levels of wages and interest. In neoclassical economics, equilibrium occurs at the intersection point of the supply and demand curves, which are in turn determined by the rational, optimizingbehavior of the agents seeking to maximize utility subject to scarcity and participating in the full set of markets in the economy. The standard neoclassical economic paradigm is the “competitive equilibrium” where given an initial set of asset-endowments for individuals (talents, skills, capital), financial, labor and product markets will, subject to certain conditions, operate to set prices so that all supplies and demands balance, and no one could be made better off without another being worse off (“Pareto optimality”).
Would Sraffa agree? Explain. What is the role of the LTV in classical economics, according to Sraffa. The labor theory of value (LTV) argues that the economic value of commodities or service is determined by the quantity of labor required to obtain them, instead of by the use its owner obtain from it. Adam Smith believed that the value of products is consistent with the number of labors or time required to obtain them.
3. Hegemony and World Order: Neo-Gramscianism Approach to IR Social forces, state and IR: transcending existing theories One of the theoretical ambitions of Cox is to explore the different configuration of state and society complexes and their implication for IR study. In this theoretical process, he especially emphasized social dimension of the state, which are most clearly seen in Gramscian concepts of hegemony, historical bloc, and civil society. On the one hand, beware of underrating state power; on the other hand, he gave additional attention to social forces and process to see how they relate to the development of states and world order. The Gramscian approach to IR thus provides a way to conceptualize world order free of the constraints
Main arguments involve the theory fails in providing sufficient account of its dynamic properties such as ‘internal relations’ between policy makers and the agents (entrepreneur). Their main concern is, Keynes could elaborate in his theory which ways the group of agents that participate in trade will be able to integrate with the policy makers of host country so as to ensure maintenances of his ideas of effective demand in the economy (Jespersen and Madsen 2012: 50). After criticism of Keynes’s theory there exists another group successors of Keynes identified as Keynesians and post-Keynesians. Each group has its own way of analysing trade and its impact on current account of the country. Keynesians who are also known as neoclassical synthesis develop their theory which considers some of ideas from the general theory.
Economics system functions is to determine who among the decision maker will make effective decision for the economy. Other than that, is to coordinate the activities of individual units and help decide who among the choice- maker will actually make efficient,
He then proposed that the distinguishing feature of the modern society was a characteristics shift in the motivation of the individual behaviour. This classification of types provides a basis for his investigation of social evolutionary process in which behaviour has come to be increasingly dominated by goal orientated rationality and less and less by tradition, values and
It was Herbert Simon who came up with the concept of “bounded rationality” to explain the more realistic approach to human problem solving capabilities. Bounded rationality means that rationality is limited by the information individual has, the cognitive limitations of their minds, and the time available to make the decision. People might take decisions that are not always rational or necessarily beneficial to them. This departure from rationality can happen both in terms of judgement and choice. This departure is captured by the Prospect Theory in Behavioural Economics.
). A decision maker (DM) makes his/her decision based on the values and preferences under considerations that satisfies DM the most. This model is also known as the utility theory. In utility theory the DM determines which alternative has the maximum utility. For example, Should I buy a cycle?