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Social Experimentation with Interdependent and Expanding Technologies

Garfagnini, U and Strulovici, B (2016) Social Experimentation with Interdependent and Expanding Technologies Review of Economic Studies. pp. 1-35.

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Abstract

How do successive, forward-looking agents experiment with interdependent and endogenous technologies? In this article, trying a radically new technology not only is informative of the value of similar technologies, but also reduces the cost of experimenting with them, in effect expanding the space of affordable technologies. Successful radical experimentation has mixed effects: it improves the immediate outlook for further experimentation but decreases the value and the marginal value of experimentation in a longer term, resulting in less ambitious “incremental” experimentation and in a reduced size of radical experimentation. Incremental experimentation lowers the option value of similar technologies, which may spur a new wave of radical experimentation. However, experimentation eventually stagnates for all parameters of the model.

Item Type: Article
Subjects : Economics
Divisions : Faculty of Arts and Social Sciences > School of Economics
Authors :
AuthorsEmailORCID
Garfagnini, UUNSPECIFIEDUNSPECIFIED
Strulovici, BUNSPECIFIEDUNSPECIFIED
Date : 10 March 2016
Identification Number : 10.1093/restud/rdw008
Copyright Disclaimer : © The Author 2016.
Uncontrolled Keywords : Experimentation, Innovation, Stagnation, Multi-Armed Bandit, Correlated Arms, Technologies, R&D
Related URLs :
Depositing User : Symplectic Elements
Date Deposited : 17 May 2016 11:18
Last Modified : 17 May 2016 11:18
URI: http://epubs.surrey.ac.uk/id/eprint/810733

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