In this paper, I identify and examine a class of normative theories that may cause rational managers to inadvertently destroy firm value in equilibrium. The problem occurs when firms take prescribed actions that result in the outcomes predicted by the theory, even though the theory rests upon...

We provide a model of dynamic duopoly in which firms face financial constraints and disappear when they are unable to fulfill them. We show that, in some cases, Cournot outputs are no longer supported in equilibrium, because if these outputs were set, a firm may have incentives to ruin the...