A new algorithm for asset allocation is developed. The algorithm provides consistent approximations to the optimal savings allocations which are dependent upon personal characteristics such as age and income. Numerical analysis is used to solve an individual's lifetime consumption-investment...

Firms routinely decide whether to make essential inputs themselves or buy the inputs from independent suppliers. Conventional wisdom suggests that a firm will not buy an input for a price above its in-house cost of production. We show that this is not necessarily the case when a monopolistic...