TITLE

The Economic Analysis Underlying Corporate Decision Making

AUTHOR(S)
Schwartz, Hugh
PUB. DATE
July 2004
SOURCE
Business Economics;Jul2004, Vol. 39 Issue 3, p50
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
The number of economists employed by industrial corporations appears to have declined sharply since 1990, an incentive for those remaining to redouble efforts to contribute to the profitability of their enterprises and hold onto their positions. This report is based on in-depth interviews with a dozen economists over the course of a year and is aimed at understanding the reasoning processes that underlie their analyses and advice. It considers the extent to which the analyses of economists in industrial, construction, and financial enterprises are based on optimizing techniques. It also considers, where analyses are based on less formal heuristics and other rules of thumb, the degree to which those rules are clearly specified and--if necessary--adjusted so as to contribute to rational and cost-efficient decision making. Suggestions are offered to improve economic analysis undertaken in business firms, with particular attention to the use of rules of thumb.
ACCESSION #
14072268

 

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