lec8notes - Historical argument about rise of a large...

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Historical argument about rise of a large corporation Visible hand of management came to replace invisiblw hand in market to incorporate production and distribution Contrary to smith At level of firm, manifested as profit maximization Going to assume that actors have full information; we have complete knowledge of all possible choices we can make Assumption of perfect information: ex) finding a hob--have complete knowledge of all possible job opportunities; hiring: info about all candidates Physical means stopping us from getting information on all people What do we do? Bounded rationality: trying to be rational, but not able to pull it off Take info available to us, then we make the best choice that we can with the limited info available, satisfactory--”satisficing” Firm satisfices--idea that we choose the most satisfactory solution given the limited info availability Firms don’t necessarily profit maximize, they maximize sales. Possible motive as head to have huge sales: better image, prestige factor--fortune
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lec8notes - Historical argument about rise of a large...

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