The economics of PKB
Very recently, the media was bombarded by the clash within the Nation awakening party, the political party is divided into two different sides. I would like to see how the economics rational explaining it. It should be clear that I am not a supporter of both parties, it is interesting for me however, all that had happened are turn out to be logically rational.

ISLAH on the way?
if that's the case, then why is so hard for them to do islah? it's not very surprising, because the islah is in fact not a sustainable point. This means that there are problem in dynamic inconsistencies in doing islah, preferences of both parties will change overtime. You see, say M is willing to accept islah, they might move from every point inside the cone to one point at the blue line, M groups are signaling, they are ready for peace treaty, calling disarmaments in their side. the problem with this, is that in the other side GD will now have a stronger incentive to wipe out all the M group, and therefore they will opt for a corner solution, choosing the 100 percent voters on the rightest point of the blue line. This happens for vice versa, with the benefit of the second mover. This explains why both parties decided to wait. As long as both parties don't have credible expected peace commitment there will no be islah. Both parties seem to send signals of continues fighting.
why are they fighting anyway?
I am not a politician, I honestly don't know. In economics literature conflicts might happen depends on the feasibility of such conflicts, internal splits or whatever we call it.
feasibility depends in two term, benefit and cost, according to Collier (2005,2006) , conflicts will happen wherever it is feasible to do.The benefit is high, since the general election is coming, more pie will be available in the near future, and if they are lucky, less mouth to feed. The cost is not enormous, some says in PKB, GD is irreplaceable, so preference toward GD is almost inelastic to external shocks. the last but not least is the probability to lose and to win, if we say the non-activating of M is a coup d'etat process then it's a rational thing to do, because historically, the other group tend to win anyway.
what about in the future?
the problem of conflicts is, it works in economies of scale framework, it gets better when it escalates even more. the losers will ask for friends and allies for help, and so do the winners, both parties accumulating their power in the expense of others which tend to be persistent Collier(2002) call this a conflict trap. I don't really understand politically, but fragmenting a political party in many small pieces is not very healthy for them, just look at PPP, or others. one thing for sure, if GD wins once more time, the more likely this things happen in the future, in an increasing scale of splits. this might happen in the future either because the probability of winning is getting higher, or whereas the cost turned to be insignificant. However no matter how significant that might be, it seems that the counter reaction is getting tougher everyday.
well, just see what will happen shall we?, time will tell.
9:27 AM | Labels: microeconomics | 6 Comments
diminishing utility?..,mind you...
This morning, me and my friend,while finishing our breakfast, we spent some time browsing the net,in the sudden, we were then discussing intensely the "anggota DPR m***m",after some time browsing the news, we came to "gossip time", AA gym getting married for the second time, even I consider it as individual rights, and that doesn't bothered me at all. it occured to us,however,normally, men, tends to have an increasing beauty of scale in Polygami. the second wife tends to be better thatn the first, and the third one might be even better than the second.
Even I do agree that the term "better" is highly arguable, but still Economics is surely against such utility maximizing, well, so much with Marginal Diminishing utility...
i wonder, is it true that whenever we're considering women,then people is naturally irrational? yet, transitivity doesn't work as well..
8:03 AM | Labels: microeconomics, utility, woman | 11 Comments