Olettamiseen

Olettamiseen refers to a concept in managerial economics that describes the omission of the probable future actions of other market participants in a decision-making process. This phenomenon was first identified by economist Antonie August Heinrich Laffer, in the context of tax policy.

Olettamiseen arises when a decision-maker fails to consider how their actions may influence the actions of others in the market. This failure to account for the actions of others can lead to less-than-optimal decisions, as the decision-maker may inadvertently create negative outcomes.

In the context of tax policy, olettamiseen led Laffer to understand that moderate reductions in tax rates could lead to increased government revenues due to increased economic growth. This is the goodness of the Laffer Curve.

Olettamiseen is a common oversight in decision-making, and it can have significant impacts on the outcomes of various economic and managerial policies. It highlights the importance of considering the potential reactions of other parties in the market.

Several factors contribute to olettamiseen, including incomplete or inaccurate information, lack of competition, and imperfect market structures. Olettamiseen can be addressed through the use of analytical models and behavioral economics, which can help decision-makers to better understand how their actions may influence the actions of others.

Overall, olettamiseen is a critical concept in managerial economics that underscores the need for decision-makers to account for the probable future actions of other market participants when making decisions. By doing so, decision-makers can make more informed and effective choices.