The firm is viewed as a collection of particular resources, that is, resources worth more to the firm than their market value because of specialized experience within the firm. Such resources can be used either for producing output or for training new resources. This assumption is incorporated into a programming model of the firm. This model is then used to derive predictive statements about the rate and direction of growth of the firm.

L. R. Klein, H. Rubin; A Constant-Utility Index of the Cost of Living 1, The Review of Economic Studies, Volume 15, Issue 2, 1 January 1947, Pages 84–87, https:

Lives Saved or Lives Lost? The Effects of Concealed-Handgun Laws on Crime Author(s): Hashem Dezhbakhsh and Paul H. Rubin Source: The American Economic Review, Vol. 88, No. 2, Papers and Proceedings of the Hundred and Tenth Annual Meeting of the American Economic Association (May, 1998), pp. 468-474 Published by: American Economic Association Stable URL: http://www.jstor.org/stable/116969 Accessed: 05/09/2008 17:45

There are competing theories as to whether managers learn from stock prices. Dye and Sridhar (2002), for example, argue that capital markets can be better informed than the firm itself, while Roll [Roll, R., 1986, “The hubris hypothesis of corporate takeovers,” Journal of Business 59, 97–216.] argues managers may ignore market signals due to hubris. In this paper, we examine whether managers listen to the market in making major corporate investments, and whether agency costs and corporate governance mechanisms help explain managers' propensity to listen. We find that, on average, managers listen to the market: they are more likely to cancel investments when the market reacts unfavorably to the related announcement. Further, we find mixed evidence consistent with the notion that managers' propensity to listen is related to agency costs. We find that firms tend to listen to the market more when more of their shares are held by large blockholders, and when their CEOs have higher pay-performance sensitivities.

In this paper we specify a model in which Congressmen, constituents, and campaign contributors simultaneously decide on behavior. Constituents and contributors desire to influence the voting behavior of Congressmen; Congressmen, on the other hand, want to be elected and vote accordingly. We empirically test this model using roll call voting on eight bills dealing with economic regulation and find support for the model. Our results indicate that part of the voting behavior of Congressmen may be explained by noneconomic factors. We also find that unions and businesses as campaign contributors are sometimes influential; unions are more often influential than is business. Ideological factors are also important in explaining voting.