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Technology Adoption Under Imperfect Information

Reinganum, Jennifer F. (1981) Technology Adoption Under Imperfect Information. Social Science Working Paper, 407. California Institute of Technology , Pasadena, CA. (Unpublished)

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This paper presents a static game theoretic model of a firm's decision to adopt a technological innovation of uncertain profitability which will reduce the production cost associated with the firm's output. Given the levels of adoption costs, discount rates and expectations regarding the profitability of the innovation, we determine the (Nash equilibrium) range of initial production costs for which each firm prefers to adopt the innovation. In addition, we ask whether a high-cost or a low-cost firm will be more likely to innovate, and whether a firm will be more likely to innovate if its rival is a high-cost or a low-cost firm.

Item Type:Report or Paper (Working Paper)
Additional Information:Published as Reinganum, Jennifer F. "Technology adoption under imperfect information." The Bell Journal of Economics (1983): 57-69.
Group:Social Science Working Papers
Subject Keywords:Nash equilibrium, Emerging technology, Technological innovation, Innovation adoption, Dominant strategy, Production costs, Game theory, High cost technology, Unit costs, Imperfect information
Series Name:Social Science Working Paper
Issue or Number:407
Record Number:CaltechAUTHORS:20171004-134915698
Persistent URL:
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:82066
Deposited By: Jacquelyn Bussone
Deposited On:06 Oct 2017 20:05
Last Modified:03 Oct 2019 18:50

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