Cake eating problem
We have a cake of sizew 1 .We want to eat it inT periods. Our utility for
the consumption plan(ct)Tt= 1 is
T∑
t= 1βt ^1 u(ct).The constraints are
T∑
t= 1ct+wT+ 1 =w 1wT+ 1 0 ,ct 0. We have a cake of sizew 1 .We want to eat it inT periods. Our utility for
the consumption plan(ct)Tt= 1 is
Tt= 1βt ^1 u(ct).The constraints are
Tt= 1ct+wT+ 1 =w 1wT+ 1 0 ,ct 0.