Consider an investor who at time t = 0 is endowed with initial capital of x(0)=x0 > 0… [Full question continued]
Introduction This problem describes an optimal control problem in economics, specifically dealing with intertemporal consumption decisions made by an investor. The goal is to choose a consumption function c(t) over time interval [0, T] that maximizes utility from consumption while ensuring the investor remains solvent over time, meaning that capital remains positive. Let’s break it […]