Suppose that you discount the future hyperbolically. Assume that both 3 and 8 are strictly greater than zero but strictly smaller than one. At t= 0, you are given the choice between the following three options: a (1 utile at t = 0), b (2 utiles at t = 1), and c (3 utiles at t = 2). As a matter of fact, at t = 0 you are indifferent between a and b and between b and c. (a) Compute B and 6.
Suppose that you discount the future hyperbolically. Assume that both 3 and 8 are strictly greater than zero but strictly smaller than one. At t= 0, you are given the choice between the following three options: a (1 utile at t = 0), b (2 utiles at t = 1), and c (3 utiles at t = 2). As a matter of fact, at t = 0 you are indifferent between a and b and between b and c. (a) Compute B and 6.
Chapter7: Uncertainty
Section: Chapter Questions
Problem 7.7P
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![Suppose that you discount the future hyperbolically. Assume that both B and 6
are strictly greater than zero but strictly smaller than one. At t= 0, you are given
the choice between the following three options: a (1 utile at t = 0), b (2 utiles at
t = 1), and c (3 utiles at t = 2). As a matter of fact, at t = 0 you are indifferent
between a and b and between b and c.
(a) Compute B and 6.
(b) Suppose, in addition, that at t= 0 you are indifferent between cand d (x utiles
at t= 3). What is x?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff90451e8-a668-460b-abc5-d967ff609c36%2F578c4e4e-486e-4c2e-878f-328508472055%2F8eqege_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose that you discount the future hyperbolically. Assume that both B and 6
are strictly greater than zero but strictly smaller than one. At t= 0, you are given
the choice between the following three options: a (1 utile at t = 0), b (2 utiles at
t = 1), and c (3 utiles at t = 2). As a matter of fact, at t = 0 you are indifferent
between a and b and between b and c.
(a) Compute B and 6.
(b) Suppose, in addition, that at t= 0 you are indifferent between cand d (x utiles
at t= 3). What is x?
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