On Learning and Growth

CIRPEE Working Paper 13-36

60 Pages Posted: 26 Oct 2013 Last revised: 20 Oct 2015

See all articles by Leonard J. Mirman

Leonard J. Mirman

University of Virginia - Department of Economics

Kevin Reffett

Arizona State University - Department of Economics

Marc Santugini

University of Virginia - Department of Economics

Date Written: October 2015

Abstract

We study optimal growth under learning. We extend the Mirman-Zilcha stochastic growth results characterizing optimal programs for general utility and production functions to the case of learning. We then use recursive methods to study the effect of learning on the dynamic program by considering the case of iso-elastic utility and linear production, for general distributions of the random shocks and beliefs (i.e., without the use of conjugate priors), for any horizon. Finally, we address the issue of experimentation by providing a solution to an infinite-horizon optimal dynamic program.

Keywords: Brock-Mirman environment, Dynamic programming, Euler equation, Experimentation, Learning, Optimal growth

JEL Classification: D8, D9, E2

Suggested Citation

Mirman, Leonard J. and Reffett, Kevin L. and Santugini, Marc, On Learning and Growth (October 2015). CIRPEE Working Paper 13-36, Available at SSRN: https://ssrn.com/abstract=2343857 or http://dx.doi.org/10.2139/ssrn.2343857

Leonard J. Mirman

University of Virginia - Department of Economics ( email )

1818 Winston Rd
Charlottesville, VA
United States

Kevin L. Reffett

Arizona State University - Department of Economics ( email )

Tempe, AZ 85287-3806
United States

Marc Santugini (Contact Author)

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States

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