Normative Economics

Normative economics is an area of economics which focuses on the value that arises from a given economic activity and the likely outcomes that arise and how they influence the economy. It more or less based on opinions of others as well as value judgments in its undertakings. It is usually founded on facts as well as explaining what need to be done and what need not be done in a given aspect of the economy.

Subfields of normative economics

Social choice theory

This is a field in normative economics that usually analyses the opinions of other people, their interest, what they prefer as well as their welfare towards attaining a collective welfare for all. It pays attention to the economic status of individuals involved as well as what they prefer and later on a policy on this is put forward which represents and pays attention to the need and concern of every individual.

 Cooperative game theory

This field in normative economics is comprised of two groups; the co-operative and the non-cooperative. In cooperative strategies, some form coalitions and come together to make decisions on issues affecting their operations. It is also a platform that boosts payoffs used to enhance as well as support individuals within the group. Non-cooperative has no coalitions made, and decisions are therefore different and vary on the economic issues.

Mechanism design

This a field that takes into consideration engineering approaches to achieve the objectives put in place where each plays a role towards the establishment of a proper system that addresses the needs that may arise.