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Exploring new technologies for the future generation: exploration-exploitation trade-off in an intergenerational

Yo Nakawake1,2, Yutaka Kobayashi1,3

  • 1School of Economics and Management, Kochi University of Technology, Kochi, 780-8515, Japan.

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|May 3, 2024
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Humans do not explore new technologies solely for future generations. Monetary incentives are key for individuals to invest in costly exploration, demonstrating a need for repayment to drive innovation investment.

Keywords:
cumulative cultural evolutionindividual learningsocial learningtransmission-chain experimentvirtual arrowhead

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Area of Science:

  • Decision Science
  • Behavioral Economics
  • Technology Adoption

Background:

  • Technological advancement relies on balancing exploration of new designs with exploitation of existing ones.
  • Intergenerational knowledge transfer presents a dilemma: exploring for future benefit may reduce current gains.

Purpose of the Study:

  • To investigate decision-making in technology exploration versus exploitation within a two-generation framework.
  • To determine if individuals invest in costly exploration without direct personal benefit.

Main Methods:

  • A laboratory experiment with a two-generation virtual tool design transmission.
  • Three conditions: 'repaid' (incentivized exploration), 'unrepaid' (non-incentivized exploration), and 'asocial' (control).
  • Analysis of formal models and computer simulations alongside experimental results.

Main Results:

  • Participants increased exploration investment only when financially incentivized ('repaid' condition).
  • Exploration investment in the 'repaid' condition was significantly higher than in the 'asocial' control.
  • No significant increase in exploration was observed in the 'unrepaid' condition compared to the control.

Conclusions:

  • Human propensity to invest in costly technological exploration is not driven solely by altruism towards future generations.
  • Monetary incentives significantly influence decisions to invest in exploration for the benefit of subsequent generations.
  • Findings highlight the critical role of perceived returns in driving innovation and technology development.