Exploitation, Exploration and Innovation in a Model of Endogenous Growth with Locally interacting Agents
AbstractThe paper presents a model of endogenous growth in which firms are modeled as boundedly-rational, locally interacting, agents. Firms produce a homogeneous good employing technologies located in an open-ended technological space and are allowed to either imitate existing, similar practices or to locally explore the technological space to find new, more productive techniques. We first identify sufficient conditions for the emergence of empirically plausible GNP time-series characterized by self-sustained growth. Then, we study the trade-off between individual rationality and collective outcomes by providing an example in which more rational agents systematically perform worse than less rational ones.
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Bibliographic InfoPaper provided by Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy in its series LEM Papers Series with number 2002/25.
Date of creation: 29 Dec 2002
Date of revision:
Innovation; Endogenous Growth; Local Interactions; Exploration vs. Exploitation.;
Other versions of this item:
- Fagiolo, Giorgio & Dosi, Giovanni, 2003. "Exploitation, exploration and innovation in a model of endogenous growth with locally interacting agents," Structural Change and Economic Dynamics, Elsevier, vol. 14(3), pages 237-273, September.
- NEP-ALL-2002-11-28 (All new papers)
- NEP-CBE-2002-11-28 (Cognitive & Behavioural Economics)
- NEP-DEV-2002-11-28 (Development)
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