On the Behavioral Theory of the Firm

  • William J. Baumol
  • Maco Stewart


The behavioral theorists have argued that in a world of uncertainty maximization models can offer very little help in explaining the behavior of firms and individuals since, when events are uncertain, apparently concrete maximands, such as the present value of the dis-discounted stream of profits, are no longer even well defined. In these circumstances the behaviorists have suggested that one must learn the firm’s decision patterns from direct observation rather than a priori considerations.


Price Change Behavioral Model Demand Curve Retail Price Price Reduction 
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Copyright information

© The President and Fellow of Harvard College 1971

Authors and Affiliations

  • William J. Baumol
  • Maco Stewart

There are no affiliations available

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