Abstract: The purpose of this paper is to study the relation between the age of an agent and her decisions about adopting new technologies. To this end I analyze the optimal sequence of technology upgrades by an agent who lives for a finite period of time. Other characteristics of the environment are the existence of technology-specific learning-by-doing, technology growth, and adoption costs. A finite planning horizon implies that the technology adoption problem is non-stationary and the frequency of adoptions changes over time. This paper provides results for the computation of the optimal plan and explores numerically the life-cycle pattern of technology switches. Adoptions may become more frequent as the agent becomes older. However the sign of the association between age and the adoption of new technologies is sensitive to variation in parameters. A tenuous pattern thus emerges which is not at odds with the findings of empirical studies.

Journal of Economic Dynamics and Control, 28, 2129-2154, 2004 download