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Not really counterfactual theory, but opportunity cost. The cost of retaining the CEO to most of the shareholders (even a consensus of them) is high because th
by choppaface 5y ago
Not really counterfactual theory, but opportunity cost. The cost of retaining the CEO to most of the shareholders (even a consensus of them) is high because they can’t realistically install a new one.
Opportunity cost gets conditioned on the investor. If you’re a maker, or a player with leverage on the board or something, your opportunity cost is different.
- nabla9 5y agoThe author is trying to reinvent the wheel. Thinking in terms of comparative advantage, autarky price, and opportunity cost makes this clearer. opportunity cost = (returns on best forgone option) - (returns on chosen option).