Do Firms Maximize? Evidence from Professional Football
AbstractThis paper examines a single, narrow decision—the choice on fourth down in the National Football League between kicking and trying for a first down—as a case study of the standard view that competition in the goods, capital, and labor markets leads firms to make maximizing choices. Play-by-play data and dynamic programming are used to estimate the average payoffs to kicking and trying for a first down under different circumstances. Examination of actual decisions shows systematic, clear-cut, and overwhelmingly statistically significant departures from the decisions that would maximize teams' chances of winning. Possible reasons for the departures are considered.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Political Economy.
Volume (Year): 114 (2006)
Issue (Month): 2 (April)
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Web page: http://www.journals.uchicago.edu/JPE/
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