Experimentation, full revelation and inspiration and collapse
Experimentation, full revelation and inspiration and collapse
We consider a simple two-period experimentation model and explore some comparative statics implications of failures in the monotone likelihood ratio property (MLRP). A canonical example of a non-MLRP noise density is a U-shaped density on a bounded interval. In that case, the optimal first period action and information at the optimum are non-monotonic in the volatility of noise. Furthermore, there may be discontinuities in the optimal action with respect to changes in the volatility of noise and other parameters, in which the agent switches back and forth between a low, non-fully-revealing action and a high, fully-revealing action.
experimentation, bounded support, learning-by-doing, monotone likelihood ratio property
239-262
Rauh, Michael T.
5e079ac6-745c-44e1-b107-06906ddeb787
Seccia, Giulio
5fb5c6bf-4289-4962-9682-d2decbb0c4ba
2005
Rauh, Michael T.
5e079ac6-745c-44e1-b107-06906ddeb787
Seccia, Giulio
5fb5c6bf-4289-4962-9682-d2decbb0c4ba
Rauh, Michael T. and Seccia, Giulio
(2005)
Experimentation, full revelation and inspiration and collapse.
Journal of Economic Behavior & Organization, 56 (2), .
(doi:10.1016/j.jebo.2003.04.007).
Abstract
We consider a simple two-period experimentation model and explore some comparative statics implications of failures in the monotone likelihood ratio property (MLRP). A canonical example of a non-MLRP noise density is a U-shaped density on a bounded interval. In that case, the optimal first period action and information at the optimum are non-monotonic in the volatility of noise. Furthermore, there may be discontinuities in the optimal action with respect to changes in the volatility of noise and other parameters, in which the agent switches back and forth between a low, non-fully-revealing action and a high, fully-revealing action.
This record has no associated files available for download.
More information
Published date: 2005
Keywords:
experimentation, bounded support, learning-by-doing, monotone likelihood ratio property
Identifiers
Local EPrints ID: 33411
URI: http://eprints.soton.ac.uk/id/eprint/33411
ISSN: 0167-2681
PURE UUID: 117bf15e-3169-4dcb-bd0f-c224925e44da
Catalogue record
Date deposited: 15 May 2006
Last modified: 15 Mar 2024 07:44
Export record
Altmetrics
Contributors
Author:
Michael T. Rauh
Author:
Giulio Seccia
Download statistics
Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.
View more statistics