Life Cycle Consumption

Life Cycle Consumption

In this example a life-cycle consumption optimization problem has been modeled, including labor and assets.

Users of this application can make changes to the model from the user interface. Two types of utility functions are available:

  • Exponential utility: Utility = - Exp( - Consumption ) - Labor^2
  • Square root utility: Utility = Sqrt( Consumption ) - Labor^2

In addition, the user can choose to allow borrowing up to a chosen level, adding explicit modeling of assets to the model.

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Keywords

Utility Function, Discount Factor, Present Value, Future Value, Nonlinear Programming, Nonlinear Solvers, Curve.

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