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Title: Learning and Technological Progess in Dynamic Games
Authors: Mirman, Leonard J.
Santugini, Marc
Keywords: Capital accumulation
Dynamic game
Technological progress
Issue Date: 2012-03
Series/Report no.: Cahiers du CIRPÉE;12-17
Abstract: We study investment and consumption decisions in a dynamic game under learning. To that end, we present a model in which agents not only extract a resource for consumption, but also invest in technology to improve the future stock. At the same time, the agents learn about the stochastic process governing the evolution of public capital, including the effect of investment in technology on future stock. Although the characterization of an infinite-horizon game with Bayesian dynamics (and without the assumption of adaptive learning) is generally intractable, we characterize the unique Cournot-Nash equilibrium for general distributions of the random variables. The addition of learning to a stochastic environment is shown to have a profound effect on the equilibrium.
Appears in Collections:Cahiers de recherche du CIRPÉE

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