Mathematics for Economists

(Greg DeLong) #1

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= 1

βt^1 u(ct).

The constraints are
T


t= 1

ct+wT+ 1 =w 1

wT+ 1  0 ,ct 0.
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