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Title:Optimal consumption choice with intolerance for declining standard of living PDF Logo
Authors:Riedel, Frank
Issue Date:2007
Series/Report no.:Working papers // Institute of Mathematical Economics 394
Abstract:Duesenberry introduced the notion of a ratchet investor who does not tolerate any decline in her consumption rate. We connect the demand behavior of such an agent to the behavior of standard time-additive agents. A ratchet investor demands the running maximum of the optimal plan a conventional time-additive investor with lower initial wealth would choose.
Subjects:Intertemporal consumption choice
Habit formation
Non-time separable utility
Persistent Identifier of the first edition:urn:nbn:de:hbz:361-13664
Document Type:Working Paper
Appears in Collections:Working Papers, Center for Mathematical Economics (IMW), Bielefeld University

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