Showing 1 - 10 of 13,026
We characterize optimal consumption policies in a recursive intertemporal utility framework with local substitution. We establish existence and uniqueness and a version of the Kuhn-Tucker theorem characterizing the optimal consumption plan. An explicit solution is provided for the case when the...
Persistent link: https://www.econbiz.de/10013445441
I study optimal consumption and investment for retirement in an economic environment where an individual has retirement flexibility and borrowing constraints. I show that Friedman's (1957) permanent income hypothesis (PIH) is generalized with retirement and constrained borrowing against future...
Persistent link: https://www.econbiz.de/10012984235
We revisit a service provider's problem to match supply and demand via an online appointment system such as a doctor in the health care sector. We identify in a survey that an extensive set of available appointments leads to significantly less demand because customers infer a lower quality of...
Persistent link: https://www.econbiz.de/10015210124
This paper studies the infinite horizon optimal consumption with a path-dependent reference under the exponential utility. The performance is measured by the difference between the non-negative consumption rate and a fraction of the historical consumption maximum. The consumption running maximum...
Persistent link: https://www.econbiz.de/10013226821
Dybvig [1995] finds optimal spending and investment strategies for a perpetual endowment that has no tolerance for spending declines. His spending rule is a ratchet --- spending never decreases, but has a substantial chance of increasing. We find the ratchet consumption rule for an investor with...
Persistent link: https://www.econbiz.de/10013113685
We study the consumption and portfolio selection problem of an agent who faces consumption irreversibility: there is disutility from changing consumption levels. The derived preference exhibits intertemporal loss aversion toward consumption changes with the previous consumption level being the...
Persistent link: https://www.econbiz.de/10012847313
This paper provides a dual formulation of the optimal consumption problem with internal multiplicative habit formation. In this problem, the agent derives utility from the ratio of consumption to the internal habit component. Due to this multiplicative specification of the habit model, the...
Persistent link: https://www.econbiz.de/10013307321
traditional theory. The aim of this study is two-fold: it investigates whether mutual regime switching behavior exists between the …
Persistent link: https://www.econbiz.de/10012954368
We document that prior portfolio choices influence investors' expectations about asset values, and their future choices. We find that people update more from information consistent with their prior choices, leading to sticky portfolios over time. These effects are related to how the brain's...
Persistent link: https://www.econbiz.de/10012956310
This paper proposes a general equilibrium model which features endogenous cross-country heterogeneity in conditional risk aversion and shows that it can generate significant equity home bias. With complete markets, financing home consumption entails hedging against increases in home conditional...
Persistent link: https://www.econbiz.de/10013244511