Ambiguity Attitude, R&D Investments and Economic Growth

Cozzi, Guido and Giordani, Paolo E. (2008) Ambiguity Attitude, R&D Investments and Economic Growth. [Working Paper]. p. 18. Working Papers (No. 2008_06). (In Press)

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The process aimed at discovering new ideas is an economic activity whose returns are intrinsically uncertain. In a standard neo-Schumpeterian growth framework we assume that, when deciding upon R&D efforts, economic agents hold ‘ambiguous beliefs’ about the exact probability of arrival of the next vertical innovations, and face ambiguity via the α-MEU decision rule (Ghirardato et al. (2004)). Along the steady-state equilibrium the higher the agents’ ambiguity aversion (α), the lower the R&D efforts and, coeteris paribus, the overall economic performance. Consistently with a cross-country empirical evidence, this causal mechanism suggests that, together with the profitability conditions of the economy, different ‘cultural’ attitudes towards ambiguity may contribute to explain the different R&D intensities observed across countries.

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
Additional Information:A revised version of this paper is accepted by Journal of Evolutionary Economics, 2010. See on author's webpage:
Uncontrolled Keywords:Schumpeterian growth, ambiguity, cultural attitude towards Ambiguity, arrival rate of innovation, R&D investments.
MIUR Scientific Area:Area 13 - Economics and Statistics > SECS-P/01 Political Economy
Deposited By:Maria Teresa Nistico
Deposited On:25 Nov 2010 10:13
Last Modified:25 Nov 2010 10:14

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