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Do Firms Maximize? Evidence from Professional Football

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  • David Romer

Abstract

This 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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  • David Romer, 2006. "Do Firms Maximize? Evidence from Professional Football," Journal of Political Economy, University of Chicago Press, vol. 114(2), pages 340-365, April.
    • Handle: RePEc:ucp:jpolec:v:114:y:2006:i:2:p:340-365
    DOI: 10.1086/501171
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