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Specification and Estimation

T. V. S. Ramamohan Rao ()
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T. V. S. Ramamohan Rao: Indian Institute of Technology Kanpur

Chapter Chapter 3 in Managerial Discretion in Imperfect Markets, 2023, pp 39-71 from Springer

Abstract: Abstract Managerial discretion reveals itself only after the consequences of every decision can be estimated. This will consist of the range of relevant decisions, how and the extent to which decisions interact with others, the threshold values of the decisions that offer the maximum effect, the tradeoff between objectives and decisions, and several other features. Some of these effects pose formidable estimation problems due to lack of data, the inability to account for the constraints on the parameters posed by the decision-making process, and others. Some of these inverse optimal problems can be approached successfully. Some decisions have long-term effects on the firm, and in others cumulative use of decisions (not necessarily in a distributed lag sense) offers an explanation for the market value of the firm. Identifying such influences does pose difficult estimation problems. In addition, estimating the separate average cost curves resulting from one decision rather than another is as yet intractable however elegantly the theoretical model visualizes it.

Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-99-1537-8_3

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DOI: 10.1007/978-981-99-1537-8_3

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