Archive for December, 2010

In Defense of Mathematical Economics

| Dick Langlois |

The webcomics version. (Thanks to Zach.)

2 December 2010 at 2:55 pm 1 comment

The Viability of the Survivor Principle

| Lasse Lien |

The survivor principle holds that the competitive process weeds out inefficient firms, so that hypotheses about efficient behavior can be tested by observing how firms actually behave. This principle underlies a large body of empirical work in strategy, economics, and management. But do competitive markets actually display what is efficient? Can we safely make the shortcut of hypothesizing that, say X, is efficient, and then test that claim by observing whether firms actually do X? Surely the competitive process is somewhat noisy and imperfect. While we all know anecdotes that seem to disprove the SP it may still be a reasonable approximation in the aggregate. This astonishing paper tests the validity of the SP in the context of corporate diversification.

1 December 2010 at 7:04 pm Leave a comment

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Nicolai J. Foss and Peter G. Klein, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012).
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