Optimal Planning in Habit Formation Models with Multiple Goods
Optimization and Control
2023-08-28 v1
Abstract
In this paper, on the line e.g. of [COW00]) we investigate a model with habit formation and two types of substitute goods. Such family of models, even in the case of 1 good, are difficult to study since their utility function is not concave in the interesting cases (see e.g. [BG20]), hence the first order conditions are not sufficient. We introduce and explain the model and provide some first results using the dynamic programming approach. Such results will form a solid ground over which a deep study of the features of the solutions can be performed.
Cite
@article{arxiv.2308.13470,
title = {Optimal Planning in Habit Formation Models with Multiple Goods},
author = {Mauro Bambi and Daria Ghilli and Fausto Gozzi and Marta Leocata},
journal= {arXiv preprint arXiv:2308.13470},
year = {2023}
}