Experimentation, full revelation and inspiration and collapse

Rauh, Michael T. and Seccia, Giulio (2005) Experimentation, full revelation and inspiration and collapse Journal of Economic Behavior & Organization, 56, (2), pp. 239-262. (doi:10.1016/j.jebo.2003.04.007).


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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.

Item Type: Article
Digital Object Identifier (DOI): doi:10.1016/j.jebo.2003.04.007
ISSNs: 0167-2681 (print)
Keywords: experimentation, bounded support, learning-by-doing, monotone likelihood ratio property

ePrint ID: 33411
Date :
Date Event
Date Deposited: 15 May 2006
Last Modified: 16 Apr 2017 22:16
Further Information:Google Scholar
URI: http://eprints.soton.ac.uk/id/eprint/33411

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