- I. The first-order conditions at a node
- A. The economy
- B. The dual first-order conditions
- C. The equilibrium
- II. Recursivity
- III. A homogeneity property, a change of state variables and the interpolation
- IV. Examples of the Basak-and-Cuoco variety
- A. The Basak-and-Cuoco (1998) equilibrium
- B. The “reverse” Basak-Cuoco equilibrium
- C. Wu’s example of buy-and-hold investors
- V. Other examples
- A. Example #2 in Cuoco and He (2001) and a comment on the method
- B. The Heaton and Lucas (1996) example
- VI. Problematic examples and issues of existence
- A. Non existence of equilibrium at isolated point
- B. Non existence of recursive equilibrium
- VII. Conclusion
- VIII. Bibliography
- Appendix 1: The event tree
- Appendix 2: The dynamic programming principle holds
- Appendix 3: Proof of Theorem 1
- Appendix 4: Detailed Proof of Lemma 1.
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