Date of This Version
February 2012
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.
Recommended Citation
Athanassoglou, Stergios; Bosetti, Valentina; and de Maere d'Aertrycke, Gauthier, "Ambiguous Aggregation of Expert Opinions: The Case of Optimal R&D Investment" (February 17, 2012). Fondazione Eni Enrico Mattei Working Papers. Paper 655.
https://services.bepress.com/feem/paper655