Learning, public good provision, and the information trap
Aleksander Berentsen (),
Esther Bruegger and
Simon Loertscher ()
Journal of Public Economics, 2008, vol. 92, issue 5-6, 998-1010
We consider an economy with uncertainty about the true production function for a public good. By using Bayes rule the economy can learn from experience. We show that it may learn the truth, but that it may also converge to an inefficient policy where no further inference is possible so that the economy is stuck in an information trap. We also show that our results are robust with respect to small experimentation.
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Working Paper: Learning, public good provision, and the information trap (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:92:y:2008:i:5-6:p:998-1010
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