Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
957376 | Journal of Economic Theory | 2007 | 10 Pages |
Abstract
We provide a refoundation of the symmetric growth equilibrium characterizing the research sector of vertical R&D-driven growth models. We argue that the usual assumptions made in this class of models leave the agents indifferent as to where targeting research: hence, the problem of the allocation of R&D investment across sectors is indeterminate. By introducing an “ɛɛ-contamination of confidence” in the expected distribution of R&D investment, we prove that the symmetric structure of R&D investment is the unique rational expectations equilibrium compatible with ambiguity-averse agents adopting a maxmin strategy.
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Authors
Guido Cozzi, Paolo E. Giordani, Luca Zamparelli,