Do Firms Maximize? Evidence from Professional Football

David Romer

Journal of Political Economy, 2006, vol. 114, issue 2, 340-365

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.

Date: 2006
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Citations: View citations in EconPapers (86)

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