Mathematics, Volume 9, Issue 18
2021 September-2 - 170 articles
Cover Story: A two-stage non-standard optimal control problem with time-inconsistent preferences is studied. In an infinite horizon setting, a time-consistent decision maker chooses the time of switching between two consecutive regimes. The second regime corresponds to the implementation of a new technology, and a cost must be paid at the switching time. The problem is solved by transforming it into a finite horizon problem with free terminal time. The dynamic programming equations are presented, and conditions for the derivation of the switching time by decision makers with different degrees of sophistication are studied. A resource extraction model with technology adoption is solved in detail. Effects of the adoption of nonconstant and heterogeneous discount functions are illustrated numerically. View this paper - Issues are regarded as officially published after their release is announced to the table of contents alert mailing list .
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