The present paper studies an optimal withdrawal and investment problem for a retiree who is interested in sustaining her retirement consumption above a prespecified minimum consumption level. Apparently, the withdrawal and investment policy depends substantially on the retiree’s health condition and her time preferences (subjective discount factor). We assume that the health of the retiree can ...

One of the recurring themes in the theory of stochastic games is the interplay between discounted games and mean-payoff games. This culminates in the seminal paper of Mertens and Neyman [12] showing that mean-payoff games have a value and this value is the limit of the values of discounted games when the discount factor tends to 1. Note however that optimal strategies in both games are very dif...

Supplier selection and material procurement planning are the most important issues in supply chain management. This decision is complicated when the buyers face with discount price schemes. In real situation, each supplier may apply different methods such as different types of discount schedules and various types of payment in order to increase market share. In this situation, buyers try to sel...

This working note provides a basic overview of discounting in the context of climate change policy. After defining the social discount factor and social discount rate in terms of shadow prices (section 2), and noting the limitations of cost-benefit analysis for climate change (section 3), the determination of efficient social discount rates is discussed given: the impact of uncertainty about fu...

We consider a discrete time Markov Decision Process, where the objectives are linear combinations of standard discounted rewards, each with a diierent discount factor. We describe several applications that motivate the recent interest in these criteria. For the special case where a standard discounted cost is to be minimized, subject to a constraint on another standard discounted cost but with ...

Researchers debate the role of installed base, platform quality and consumer expectations in driving the success of platforms. We analyze a dynamic model in which a new entrant with superior quality competes with an incumbent platform, and examine the long-run market outcomes. We find that the driver of market dynamics depends critically on the strength of indirect network effects and the consu...

This paper studies an infinite-horizon repeated moral hazard problem where a single principal employs several agents. We assume that the principal cannot observe the agents’ effort choices; however, agents can observe each other and can be contractually required to make observation reports to the principal. Observation reports, if truthful, can serve as a monitoring instrument to discipline the...

SUMMARY Economists assess dollar costs and benefits in the future by discounting them. Each cost or benefit is multiplied by a discount factor appropriate to the time when it occurs, and then total discounted costs are subtracted from total discounted benefits to get net present value. The rate by which the discount factor declines over time is the discount rate. Economists also apply discounti...

This paper considers optimal social insurance in a dynamic moral hazard economy. The existing literature has focussed on environments in which a planner and a population of agents share the same discount factor. A key finding is that agents are then almost surely immiserated; their welfare is driven to its lowest bound. Such immiseration requires a social commitment to treat (almost) everyone a...

The existing literaturewhich analyses the relationship between the product differentiation degree and the sustainability of a collusive agreement on price assumes that firms cannot price discriminate, and concludes that there is a negative relationship between the product differentiation degree and the critical discount factor. This paper, in contrast, assumes that firms are able to price discr...