Ambiguous Aggregation of Expert Opinions: The Case of Optimal R&D Investment

Stergios Athanassoglou, Valentina Bosetti and Gauthier de Maere d'Aertrycke
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Stergios Athanassoglou: Fondazione Eni Enrico Mattei and Euro-Mediterranean Center for Climate Change
Authors registered in the RePEc Author Service: Stergios Athanasoglou

No 2012.04, Working Papers from Fondazione Eni Enrico Mattei

Abstract: How should a decision-maker allocate R&D funds when a group of experts provides divergent estimates on a technology's potential effectiveness? To address this question, we propose a simple decision-theoretic framework that takes into account ambiguity over the aggregation of expert opinion and a decision-maker's attitude towards it. In line with the paper's focus on R&D investment, decision variables in our model may affect experts' subjective probability distributions of the future potential of a technology. Using results from convex optimization, we are able to establish a number of analytical results including a closed-form expression of our model's value function, as well as a thorough investigation of its differentiability properties. We apply our framework to original data from a recent expert elicitation survey on solar technology. The analysis suggests that more aggressive investment in solar technology R&D is likely to yield significant dividends even, or rather especially, after taking ambiguous aggregation into account.

Keywords: Aggregation; Ambiguity; R&D; Expert Opinions; Convex/Conic Optimization (search for similar items in EconPapers)
JEL-codes: C61 D81 Q42 (search for similar items in EconPapers)
Date: 2012-01
New Economics Papers: this item is included in nep-ene, nep-ino and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Ambiguous Aggregation of Expert Opinions: The Case of Optimal R&D Investment (2012)
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