cakeeating

cakeeating - 3. Solver Paramters: 4. Voila! by Michael...

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The Cake-Eating Problem The consumer maximizes Optimal Consumption Path Calculated with Solver Period t 0 1 2 3 4 5 6 7 8 9 end Consumption 22.41 17.92 14.35 11.47 9.18 7.35 5.87 4.70 3.76 3.01 Cake Size 100.00 77.59 59.67 45.33 33.86 24.68 17.34 11.47 6.77 3.01 0.00 Period Utility 3.11 2.89 2.66 2.44 2.22 1.99 1.77 1.55 1.32 1.10 Discounted Utility 3.11 2.31 1.70 1.25 0.91 0.65 0.46 0.32 0.22 0.15 subject to Total Utility 11.09 = 100 β = 0.8 2. Solve the problem using the Solver: Extras/Solver… If you can't find the Solver click on Extras/Add-Ins and check mark the box next to Solver Add-in.
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Unformatted text preview: 3. Solver Paramters: 4. Voila! by Michael Stastny k 1. Choose an initial cake size (k ) and a discount factor (0 < β ≤ 1). Set Target Cell: $H$11 ...we want to maximize total utility, don't we? By Changing Cells: $H$6:$Q$6 ...checking different levels of consumption Subject to the Constraint: $I$7:$R$7 <= 0 … you can't eat more than you have… http://www.economist.at 9 1 9 ( ) , ,. .., ln( ) t t t c c c c V β = = ∑ 1 1 0 t t t t k k t k c--= -≥ 2200...
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This note was uploaded on 12/14/2011 for the course FIN 5515 taught by Professor Staff during the Spring '10 term at FSU.

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