Consider the habit formation preferences introduced in (9.35)-(9.36), with respect to a general utility function (u). (i)

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Consider the habit formation preferences introduced in (9.35)-(9.36), with respect to a general utility function $u$.

(i) Derive the Euler condition (9.39) (compare also with Munk [1363, Theorem 6.9]).
(ii) Consider the habit formation preferences introduced in (9.40). Show that in this case the general Euler condition (9.39) reduces to (9.41).

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Financial Markets Theory Equilibrium Efficiency And Information

ISBN: 9781447174042

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Authors: Emilio Barucci, Claudio Fontana

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Question Posted: Mar 26, 2024 06:00 AM

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Consider the habit formation preferences introduced in (9.35)-(9.36), with respect to a general utility function (u). (i)

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