rax 08 Recitation 11.20 Bellman Equation: ݒሺ݅,݆ሻൌm a x ௗאௌሺ,ሻ ቄܿ൫ሺ݅,݆ሻ,݀൯ݒቀܶ൫ሺ݅,݆ሻ,݀൯ቁቅݒሺ݅, ݆ሻ optimal value of stage i in state jܵሺ݅, ݆ሻ set of possible decisions in stage i , from state jܶ൫ሺ݅, ݆ሻ,݀൯ transition state, given decision dܿ൫ሺ݅, ݆ሻ,݀൯ cost of transition, given decision d 1.- Maximization of Utility (Deterministic DP) After some years of working in complicated FE problems, and given the large amount of wealth you have accumulated ( x0 ), you decide to retire maximize the utility of that money for the next N years. Every year Tk, you use an amount of uk of your wealth, which gives you a utility of ඥݑand keep the rest in a nice investment fund that gives you a rate of r
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