Investors who studied graduate economics or political science will recognize the title - borrowed from that of the fascinating and seminal essay by Albert O. Hirschman that assesses "Responses to Decline in Firms, Organizations, and States."

Hirschman, an economist, wrote in 1970, an "age of protest" against businesses and government agencies, of Ralph Nader and the Chicago Seven. He analyzes how citizens rise up in society, volunteers object to a charity's goals, and customers complain to companies, all in response to what he calls the "repairable lapse" in the "quality of output" of various types of entities.

His argument helps us with a long-standing puzzle: why do some investors become activist investors? It also guides us to understanding the situations in which it make sense to become an activist investor.

Our current blog post applies his reasoning to these important puzzles.