Do Firms Maximize? Evidence from Professional Football

This paper examines a single, narrow decision—the choice on fourth down in the National Football League between kicking and trying for a first down—as a case study of the standard view that competition in the goods, capital, and labor markets leads firms to make maximizing choices. Play‐by‐play data and dynamic programming are used to estimate the average payoffs to kicking and trying for a first down under different circumstances. Examination of actual decisions shows systematic, clear‐cut, and overwhelmingly statistically significant departures from the decisions that would maximize teams’ chances of winning. Possible reasons for the departures are considered.