An Uncertainty-Based Explanation of Symmetric
Cozzi, Guido and Giordani, Paolo E. and Zamparelli, Luca (2006) An Uncertainty-Based Explanation of Symmetric. [Working Paper]. p. 19. Sonderforschungsbereich 504 Publications (No. 06-08). (Submitted)
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Official URL: http://www.sfb504.uni-mannheim.de/publications/dp0...
We provide a re-foundation of the symmetric growth equilibrium characterizing the research sector of all vertical R&D-driven growth models. This result does not rely on the usual assumption of a symmetric expectation on the future per-sector R&D expenditure. Indeed, with this structure of expectations, returns in R&D are equalized, and agents turn out to be indifferent as to where targeting research: hence, the problem of the allocation of R&D investments across sectors is indeterminate. In line with the ’true’ Schumpeterian perspective, we solve this indeterminacy by allowing for decision makers strictly uncertain about the future per-sector distribution of R&D efforts. By using the Gilboa-Schmeidler’s MEU decision rule, we prove that the symmetric structure of R&D investment is the unique rational expectations (RE) equilibrium compatible with uncertainty-averse agents adopting a maximin strategy.
|Item Type:||Report / Paper (Working Paper)|
|Research documents and activity classification:||Working Papers > Non-Refereed Working Papers / of national relevance only|
|Divisions:||Department of Business and Management|
|Uncontrolled Keywords:||R&D-Driven GrowthModels, Multi-Prior Beliefs, Maxmin Strat- egy, Symmetric Equilibrium.|
|MIUR Scientific Area:||Area 13 - Economics and Statistics > SECS-P/01 Political Economy|
|Deposited By:||Maria Teresa Nistico|
|Deposited On:||25 Nov 2010 09:51|
|Last Modified:||25 Nov 2010 09:51|
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