Dynamics: Intertemporal Decision-Making

Orlando Gomes

Chapter Chapter 1 in Intertemporal and Strategic Modelling in Economics, 2022, pp 1-29 from Springer

Abstract: Abstract Economic agents take decisions and make plans that often involve not only the current period of time but a more or less long horizon into the future. Agents are forward-looking and most of their decision-making consists in choosing today how to allocate resources over dates that are yet to come. In this first chapter, economic dynamic decision-making is introduced by looking at the planning behavior of a representative household, who chooses an optimal consumption path (and, thus, chooses, how much to consume and how much to save at each date), with the objective of maximizing intertemporal utility. Besides consumption, other variables might be considered as arguments of the utility function of the household, as leisure or money; these will be scrutinized as well.

Date: 2022
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DOI: 10.1007/978-3-031-09600-6_1

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