Munich Personal RePEc Archive

Behavioral economics as applied to firms: a primer

Armstrong, Mark and Huck, Steffen (2010): Behavioral economics as applied to firms: a primer.

[img]
Preview
PDF
MPRA_paper_20356.pdf

Download (281kB) | Preview

Abstract

We discuss the literatures on behavioral economics, bounded rationality and experimental economics as they apply to firm behavior in markets. Topics discussed include the impact of imitative and satisficing behavior by firms, outcomes when managers care about their position relative to peers, the benefits of employing managers whose objective diverges from profit-maximization (including managers who are overconfident or base pricing decisions on sunk costs), the impact of social preferences on the ability to collude, and the incentive for profit-maximizing firms to mimic irrational behavior.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.