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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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 Nisticò
Date Deposited: 25 Nov 2010 08:51
Last Modified: 22 Apr 2015 00:13


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