Economics Dictionary of ArgumentsHome
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| Strategies: A strategy is a high-level plan to achieve one or more goals under conditions of uncertainty. It involves making trade-offs and choices about how to allocate resources and capabilities. See also Planning, Goals, Actions, Action theory, Behavior, Decisions, Decision theory, Game theory._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Richard Thaler on Strategies - Dictionary of Arguments
Henderson I 93 Strategies/Thaler/Henderson/Globerman: Alchian thesis: (...) predictions from economic models that assume rational decision-making would be reasonably predictive over time. >Rational choice, >Rationality, >Decisions, >Decision-making processes. Selection: The reason is that the for-profit environment selects for success. Firms whose managers implement strategies that lead to higher profits, whether the strategies were chosen intentionally or by accident, do better in the marketplace, while firms that make worse decisions do worse and may even disappear. >Behavioral economics/Alchian, >Profit maximization. Henderson I 94 Thaler: In his book Misbehaving: The Making of Behavioral Economics(1), Thaler gives an example that illustrates the point directly above. He and Cade Massey, a fellow behaviouralist, did extensive work to estimate the value of top draft picks in the National Football League draft relative to the value of lower draft picks. They concluded that the best strategy for a team owner is to trade away first-round picks for additional picks later in the draft and to lend picks in the current year for better picks in the next year. (…) Washington Redskins (now the Washington Football Team) owner Daniel Snyder (…) seemed to follow what they were saying. Whatever Snyder's understanding, he didn't follow their advice. False strategy: Snyder traded up to get quarterback Robert Griffen III. In retrospect, with all RG3's injuries, it turned out to be a very bad choice. But Thaler's and Massey's point doesn't depend on retrospective thinking: their powerful evidence said in advance that this would almost certainly be a bad choice. The result: the Washington Redskins had a string of losing seasons. 1. Thaler, Richard (2016b). Misbehaving: The Making of Behavioral Economics. W.W. Norton._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
EconThaler I Richard Thaler Misbehaving: The Making of Behavioral Economics New York 2016 Henderson I David R. Henderson Steven Globerman The Essential UCLA School of Economics Vancouver: Fraser Institute. 2019 |
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