Ambiguity Attitude, R&D Investments and Economic Growth
AbstractThe process aimed at discovering new ideas is an economic activity whose returns are intrinsically uncertain. In a standard neo-Schumpeterian growth framework we assume that, when deciding upon R&D efforts, economic agents hold ‘ambiguous beliefs’ about the exact probability of arrival of the next vertical innovations, and face ambiguity via the α-MEU decision rule (Ghirardato et al. (2004)). Along the steady-state equilibrium the higher the agents’ ambiguity aversion (α), the lower the R&D efforts and, coeteris paribus, the overall economic performance. Consistently with a cross-country empirical evidence, this causal mechanism suggests that, together with the profitability conditions of the economy, different ‘cultural’ attitudes towards ambiguity may contribute to explain the different R&D intensities observed across countries.
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Bibliographic InfoPaper provided by Business School - Economics, University of Glasgow in its series Working Papers with number 2008_06.
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Schumpeterian growth; ambiguity; cultural attitude towards Ambiguity; arrival rate of innovation; R&D investments.;
Other versions of this item:
- Guido Cozzi & Paolo Giordani, 2011. "Ambiguity attitude, R&D investments and economic growth," Journal of Evolutionary Economics, Springer, vol. 21(2), pages 303-319, May.
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- Z1 - Other Special Topics - - Cultural Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-03-15 (All new papers)
- NEP-INO-2008-03-15 (Innovation)
- NEP-UPT-2008-03-15 (Utility Models & Prospect Theory)
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