Suppose that a consumer retires with wealth w and wishes to choose remaining lifetime consumption stream c1,

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Suppose that a consumer retires with wealth w and wishes to choose remaining lifetime consumption stream c1, c2, . . . , cT to maximize total utility

Assuming that the consumer's utility function u is concave, show that it is optimal to consume a constant fraction = w/T of wealth in each period.

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Foundations of Mathematical Economics

ISBN: 978-0262531924

1st edition

Authors: Michael Carter

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Question Posted: May 02, 2016 11:41 AM

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Suppose that a consumer retires with wealth w and wishes to choose remaining lifetime consumption stream c1,

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U-uc with

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Since is concave Jensens inequality imp...View the full answer

Foundations of Mathematical Economics

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