Berentsen, Aleksander; Brügger, Esther; Loertscher, Simon (2008). Learning, public good provision, and the information trap. Working paper series / Institute for Empirical Research in Economics No. 371, University of Zurich.
We consider an economy where decision maker(s) do not know the true production function for a public good. By using Bayes rule they can learn from experience. We show that the economy may learn the truth, but that it may also converge to an inefficient policy where no further inference is possible so that the economy is stuck in an information trap. We also show that our results are robust with respect to experimentation.
We consider an economy where decision maker(s) do not know the true production function for a public good. By using Bayes rule they can learn from experience. We show that the economy may learn the truth, but that it may also converge to an inefficient policy where no further inference is possible so that the economy is stuck in an information trap. We also show that our results are robust with respect to experimentation.
| Item Type: | Working Paper |
|---|---|
| Communities & Collections: | 03 Faculty of Economics > Department of Economics
Working Paper Series > Institute for Empirical Research in Economics (former) |
| Dewey Decimal Classification: | 330 Economics |
| Language: | English |
| Date: | May 2008 |
| Deposited On: | 29 Nov 2011 22:47 |
| Last Modified: | 27 Nov 2020 07:15 |
| Series Name: | Working paper series / Institute for Empirical Research in Economics |
| ISSN: | 1424-0459 |
| OA Status: | Green |
| Official URL: | http://www.econ.uzh.ch/wp.html |
Berentsen, Aleksander