Experimentation with accumulation

• Author(s): Cunha-e-Sá, Maria A. ; Santos, Vasco
• Date: 2007
• Persistent ID: http://hdl.handle.net/10362/11676
• Origin: Repositório Institucional da UNL
• Subject(s): Signal-dependent experimentation; Accumulation; Pollution
• Document Type: Other
• Language: English

Description

We study signal-dependent experimentation in the presence of accumulation and show that the passive-learner’s action surprisingly coincides with the experimentor’s when the unknown term is the one determining the decay rate of the stock, while they differ when the parameter being learned is the one measuring the accumulation rate. These results highlight the importance of the dynamic structure of the problem in signal-dependent experimentation. Moreover, they have important consequences for the pollution-accumulation debate currently in progress.