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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 |
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