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> It would just as likely or even more likely be something like personal wealth maximization by an employee or group of employees, personal relationship improve
by dlkf 7y ago
> It would just as likely or even more likely be something like personal wealth maximization by an employee or group of employees, personal relationship improvement, ego gratification, maintaining/improving social standing, effort minimization, etc.
Do you have any evidence for this?
> I think you grossly overestimate the ability of most large businesses to behave rationally form an organizational profit maximization perspective.
You're free to think this but it doesn't really square with common sense. Profit maximization is a stated goal of large orgs, and by definition they're doing ok at it.
In any case, your comment does nothing to diminish OP's point: that the shape of the demand matters. What the shape of the demand is in this case is an empirical question and you haven't provided any evidence.
- lzol 7y agoPeople and businesses don't behave rationally. They behave with bounded rationality [0]. That is, they make the most rational decisions with information available to them. No one is working with perfect information. This leaves plenty of room for them to leave money on the table. With that said, I have no guarantee that these companies are leaving money on the table. We also have no guarantee that they aren't. The best you are going to be able to do is create a model. Models are not reality. Models use assumptions. You're making two huge assumptions. One, that the models assumptions are correct. Two, the people interpreting the model are doing it correctly. Humans are imperfect, we make imperfect models, those models are interpreted by other imperfect humans. Making concrete statements either way is silly in my opinion. [0] https://en.wikipedia.org/wiki/Bounded_rationality https://en.wikipedia.org/wiki/Bounded_rationality