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Type | Working Paper |
Scope | Discipline-based scholarship |
Title | Growth and likelihood |
Organization Unit | |
Authors |
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Language |
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Institution | Centre for Economic Policy Research |
Series Name | CEPR Discussion Papers |
Number | 18339 |
ISSN | 0265-8003 |
Number of Pages | 40 |
Date | 2023 |
Abstract Text | We examine a stochastic growth process that can alternatively be interpreted as a model of economic growth, financial portfolio management, statistical inference, or biological population growth. For the economic interpretation, we find that the growth-maximizing policy satisfies a meritocracy principle: it minimizes the discrepancy between the resource shares allocated to the agents and the agents' ``merits.'' For the statistical interpretation, the setting is equivalent to a model of predictive coding, in which a misspecified system maximizes the fit of data. A consistency principle analogous to the meritocracy principle requires the optimal fit to minimize a degree of Bayes inconsistency. |
Official URL | https://cepr.org/publications/dp18339 |
Other Identification Number | merlin-id:24281 |
PDF File | Download from ZORA |
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