Do Firms Maximize? Evidence from Professional Football

Posted: 17 May 2006

See all articles by David H. Romer

David H. Romer

University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER)

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.

Suggested Citation

Romer, David H., Do Firms Maximize? Evidence from Professional Football. Journal of Political Economy, Vol. 114, pp. 340-365, April 2006, Available at SSRN: https://ssrn.com/abstract=901848

David H. Romer (Contact Author)

University of California, Berkeley - Department of Economics ( email )

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