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http://ssrn.com/abstract=2005005
 
 

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


Stergios Athanassoglou


Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Center for Climate Change

Valentina Bosetti


Fondazione Eni Enrico Mattei (FEEM); Bocconi University; CMCC - Euro Mediterranean Centre for Climate Change

Gauthier De Maere d'Aertrycke


Fondazione Eni Enrico Mattei

February 14, 2012

FEEM Working Paper No. 4.2012

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..

Number of Pages in PDF File: 45

Keywords: Aggregation, Ambiguity, R&D, Expert Opinions, Convex/Conic Optimization

JEL Classification: C61, D81, Q42

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Date posted: February 16, 2012 ; Last revised: June 13, 2014

Suggested Citation

Athanassoglou, Stergios and Bosetti, Valentina and de Maere d'Aertrycke, Gauthier, Ambiguous Aggregation of Expert Opinions: The Case of Optimal R&D Investment (February 14, 2012). FEEM Working Paper No. 4.2012. Available at SSRN: http://ssrn.com/abstract=2005005 or http://dx.doi.org/10.2139/ssrn.2005005

Contact Information

Stergios Athanassoglou (Contact Author)
Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Center for Climate Change ( email )
C.so Magenta 63
Milano, 20123
Italy
Valentina Bosetti
Fondazione Eni Enrico Mattei (FEEM) ( email )
C.so Magenta 63
Milano, 20123
Italy
Bocconi University ( email )
Via Gobbi 5
Milan, 20136
Italy
CMCC - Euro Mediterranean Centre for Climate Change
Viale Gallipoli, 49
Lecce, 73100
Italy
Gauthier De Maere d'Aertrycke
Fondazione Eni Enrico Mattei ( email )
C.so Magenta 63
Milano, 20123
Italy
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