## Abstract

I propose a technique, counting 'equations' and 'unknowns', for determining when the posterior distributions of the parameters of a linear regression process converge to their true values. This is applied to examples and to the infinite-horizon optimal control of this linear regression process with learning, and in particular to the problem of a monopolist seeking to maximize profits with unknown demand curve. Such a monopolist has a tradeoff between choosing an action to maximize the current-period reward and to maximize the information value of that action. I use the above technique to determine the monopolist's limiting behavior and to determine whether in the limit it learns the true parameter values of the demand curve.

Original language | English (US) |
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Pages (from-to) | 687-713 |

Number of pages | 27 |

Journal | Journal of Economic Dynamics and Control |

Volume | 15 |

Issue number | 4 |

DOIs | |

State | Published - Oct 1991 |

## ASJC Scopus subject areas

- Economics and Econometrics
- Control and Optimization
- Applied Mathematics