Berentsen, Aleksander; Bruegger, Esther; Loertscher, Simon - In: Journal of Public Economics 92 (2008) 5-6, pp. 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...