Three essays on learning-by-doing and monetary incentive

This dissertation covers two major issues. The first two papers examine the question whether learning-by-doing matters. The third paper investigates if incentives help subjects to correct their inconsistent behaviors.;The first paper deals with the role of innovation in the context of an openeconomy with natural resource scarcity. A closed-economy with resource scarcity may inhibit innovation. This paper reexamines the same problem under the open-economy assumption with technological spillovers (through learning-by-doing). It discusses the effects of trade, technological spillovers and resource scarcity on innovation and on economic growth. It derives the conditions under which resource scarcity may not constrain innovation in an open-economy and therefore, may sustain a constant per capita consumption in the long-run.;In my second paper I show that a small open economy may continue to gain from trade (in the long-run) in the presence of a renewable resource management regime (aquaculture) where the social planner reinvests part of its rent in an alternative resource-specific asset such as research and development. The paper distinguishes various types of technological improvements and their effects. The paper concludes that the consumption and the growth path of this economy would be smoother than predicted under an open access regime of a small open economy.;The Allais paradox exists when a person violates the independence axiom of expected utility theory by making inconsistent choices. The third paper shows that both aggressive and moderate levels of market-like arbitrage can significantly reduce the frequency of the paradox relative to a no-arbitrage baseline.