“guess and verify” method, we determine the value function of the social planner in the centralized economy and the value … function of the representative agent in the decentralized case. We show that the introduction of income taxes on wages and of a …

, value function, evaluation * This paper is a based on results from unpublished working papers by Harvey (1998a,b). His … integral value function, and a model of this type will be called an integral-value model. A value function (1) represents … preference relation is represented by an additive value function, Vx x a x niii n (,, ) () 1 1 … = ∑ = v , in which the scales v …

guess and verify method, we determine the value function of the social planner in the centralized economy and the value … function of the representative agent in the decentralized case. We show that the introduction of income taxes on wages and of a …

between consequences that are equivalent to an integral value function having a discounting function and an intertemporal …

are greater over losses than gains. If the utility or value function is assumed to be bounded, the degree of loss aversion … accept infinite gain bets at low probabilities. Boundedness of the value function in CPT implies that the indifference curve … bet) and a minimum at low probabilities, as the shape of the value function dominates the probability weighting function …

This paper presents an algorithm for solving nonlinear dynamic stochastic models that computes value function by …