Experimentation with accumulation

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Abstract

We study signal-dependent experimentation in the presence of accumulation and show that the passive-learner's action surprisingly coincides with the experimentor's when the unknown term is the one determining the decay rate of the stock, while they differ when the parameter being learned is the one measuring the accumulation rate. These results highlight the importance of the dynamic structure of the problem in signal-dependent experimentation. Moreover, they have important consequences for the pollution-accumulation debate currently in progress. (c) 2007 Elsevier B.V. All rights reserved.
Original languageEnglish
Pages (from-to)470-496
JournalJournal Of Economic Dynamics & Control
Volume32
Issue number2
DOIs
Publication statusPublished - 1 Jan 2008

Keywords

  • signal-dependent experimentation
  • accumulation
  • pollution

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