Doctoral Dissertation Research in Economics: Do Firms Indeed Pursue Profit Maximization? An Experiment

利润最大化是经济学家用来模拟企业行为的一种简单工具，这种利润最大化的假设在经济学中很普遍。然而，利润最大化是描述企业行为的唯一途径，这一点值得怀疑。在现代经济中，除家族企业外，许多企业的所有权和经营权是分开的。所有者通常是股东，他们从自己的公司获得股息。管理人员，如首席执行官和工人，根据他们的工作表现从公司获得工资，以利润和销售额、收入、市场份额或其他量化指标表示。例如，假设经理的工资是由他的销售额决定的。然后，他将专注于增加销售额，这导致了与经理根据公司利润决定工资的情况不同的结果。换句话说，企业的行为取决于管理者的激励是如何确定的。管理者(由所有者委托)做出与公司运营相关的决策，这并不一定会导致利润最大化的行为。虽然以前有一些关于战略委托的研究，但大多数经济学研究都假设利润最大化，而没有考虑战略委托。因此，本研究将考察战略委托下的企业行为与纯利润最大化下的企业行为有何不同。本实验研究使用两阶段古诺双寡头博弈来描述市场中的战略委托(Vickers，1985；Fershtman和Judd，1987；Jansen等人，2007)。在实验中，一个市场中有两家公司。每家公司由一名所有者和一名经理组成。在第一阶段，两个企业所有者选择一个契约来决定管理者的激励：利润委托(仅利润)、收入委托(利润和加权收益)和市场份额委托(利润和加权市场份额)。在第二阶段，经理们选择是否串通。在战略授权下，所有者和管理者的选择将决定市场产出。从理论上讲，战略授权下的市场结果比利润最大化下的市场结果更具侵略性。因此，本研究将考察理论结果是否在战略授权下进行。这项研究将有助于理解企业的行为比以前分析的更具竞争力/更弱。例如，Spierdijk和Zaouras(2017)表明，如果企业没有实现利润最大化，那么通过利润最大化假设得到的勒纳指数不适合描述市场力量。作为此类研究的延伸，本研究将使用实验来识别企业的非利润最大化行为。此外，该项目还将有助于改进结构模型。自BLP模型(Berry，Levinsohn，and Pakes，1995)提出以来，需求估计得到了改进，但模型中的“供给”部分仍然假设利润最大化，导致低估了边际成本。因此，实验研究的结果可能有助于改进结构模型。这一奖项反映了NSF的法定使命，并通过使用基金会的智力优势和更广泛的影响审查标准进行评估，被认为值得支持。

Profit maximization is a simple tool that economists use to model firms' behaviors; and this assumption of profit maximization is pervasive in economics. However, it is doubtful that profit maximization is the only way to describe firms’ behaviors. In a modern economy, ownership and management are separated for many firms, except for family-owned businesses. Owners are usually shareholders, and they get dividends from their own companies. Managers, such as a CEO and workers, get salaries from companies based on their working performances, indicated as profit and sales, revenue, market shares, or other quantitative indices. For example, suppose a manager’s salary is decided by his sales. Then, he will focus on increasing sales, which leads to a different outcome compared to the case where the manager’s salary is decided based on the firm’s profit. In other words, firms’ behaviors depend on how managers’ incentives are determined. Managers (delegated by owners) make decisions related to firms’ operations, and this does not necessarily result in profit-maximizing behavior. Though there was some research about strategic delegation before, most economic research has assumed profit maximization, without considering strategic delegation. Therefore, this research will examine how firms’ behaviors under strategic delegation are different from those obtained under pure profit maximization. This experimental study uses a two-stage Cournot duopoly game to describe strategic delegation in a market (Vickers, 1985; Fershtman and Judd, 1987; Jansen et al., 2007). In the experiment, there are two firms in a market. Each firm consists of one owner and one manager. In Stage 1, both firm owners choose a contract determining the managers’ incentives: profit delegation (only profit), revenue delegation (profit and weighted revenue), and market share delegation (profit and weighted market share). In Stage 2, managers choose whether or not to collude. Owners’ and managers’ selections will determine market output under strategic delegation. Theoretically, the market outcome under strategic delegation is more aggressive than that under profit maximization. Thus, this study will investigate whether the theoretical results are held under strategic delegation. This research will help understand firms’ behaviors are more/less competitive than analyzed before. For example, Spierdijk and Zaouras (2017) show that the Lerner index obtained by profit maximization assumption is not appropriate to describe market power if firms do not maximize profit. As an extension of such research, this study will use experiments to identify firms’ behaviors that are not profit-maximizing. Also, this project will contribute to improving structural models. Since the BLP model (Berry, Levinsohn, and Pakes, 1995) was proposed, demand estimation has been advanced, but the ‘supply’ part from the model still assumes profit maximization that leads to underestimating the marginal cost. Thus, the results of the experimental study will potentially help improve structural models.This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.