Technology adoption under uncertainty in general equilibrium

Investment is often irreversible, especially at the aggregate level. This paper proposes and solves a general equilibrium model of technology adotpion when investment in the new technlogy is irreversible. In contrast to prior research, we consider a setup where the returns on technology adoption are uncertain. We find that even without learning by doing it may be optimal for the representative agent to wait before acquiring the technlogy. We relate the timing of technology adoption to the risk aversion of the representative agent and demonstrate that the value of waiting to invest quickly disappears with the introduction of risk aversion in an equilibrium framework