Hyperbolic Discounting: Consider the three-period example of a player with hyperbolic discounting described in Section 8.3.4 with utility In(x) in each of the three periods and with discount factors 0 < 8 < 1 and 0 < B < 1. Solve the optimal choice of player 2, the second-period self, as a function of his budget K2, 8, and B. b. Solve the optimal choice of player 1, the first-period self, as a function of K, 8, and B.

Hyperbolic Discounting: Consider the three-period example of a player with hyperbolic discounting described in Section 8.3.4 with utility In(x) in each of the three periods and with discount factors 0 < 8 < 1 and 0 < B < 1. Solve the optimal choice of player 2, the second-period self, as a function of his budget K2, 8, and B. b. Solve the optimal choice of player 1, the first-period self, as a function of K, 8, and B.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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