thegreatkazoo
Smash Master
After reading Gregg Easterbrook's Tuesday Morning Quarterback for two years, and the subject again being brought up in this week's article, I was lead to ask the following question:
Do firms minimize choices to eschew negative publicity, though said choices are actually detrimental to the firm? If so, why?
Or put in a layman's term: Do social groups make decisions which, while avoiding negative press, are actually detrimental to them?
I will assume the position that they do & show a possible reason to why they may do so.
Evidence for which can be found in an interesting source: the National Football League & punts. Four years ago, UC-Berkeley Economics professor David Romer wrote this paper (if you don't want to read the whole paper, reading the first six pages will suffice) which shows that a firm (in this case, professional football teams) made decisions which minimized their choices and overall utility by punting in 4th & short situations. This was mentioned in Easterbrook's article here. A year later, he analyzed the results with Accuscore and obtained similar results. Similar results are seen from here as well.
With this being known, the question would be why do firms do so. Often, it is more for avoiding any potential criticism. As noted in this week's TMQ:
Happy debating.
Do firms minimize choices to eschew negative publicity, though said choices are actually detrimental to the firm? If so, why?
Or put in a layman's term: Do social groups make decisions which, while avoiding negative press, are actually detrimental to them?
I will assume the position that they do & show a possible reason to why they may do so.
Evidence for which can be found in an interesting source: the National Football League & punts. Four years ago, UC-Berkeley Economics professor David Romer wrote this paper (if you don't want to read the whole paper, reading the first six pages will suffice) which shows that a firm (in this case, professional football teams) made decisions which minimized their choices and overall utility by punting in 4th & short situations. This was mentioned in Easterbrook's article here. A year later, he analyzed the results with Accuscore and obtained similar results. Similar results are seen from here as well.
With this being known, the question would be why do firms do so. Often, it is more for avoiding any potential criticism. As noted in this week's TMQ:
But, why should a firm (or any social group in general) not maximize utility for its members?
Happy debating.