Economic Decision Making Using Cost Data

Chapter 6

Are You a Better Decision Maker … Yet?

Ultimately, the success of a manager boils down to how well he applies economic concepts to his decisions. Ironically, our observations seem to indicate that managers often rise through the ranks of companies without fully understanding the basic economic tenets of decision making. It isn’t that they are bad at their jobs; in fact, the opposite is usually true. Most firms only promote the most productive employees. But successful managers make their way up the corporate ladder not just because they’re hard-working or understand company politics. Rather, the successful manager is willing to question convention and think outside the box.

Let’s illustrate through a real-world example. Donald Washkewicz ...