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Chapter 8 - Dynamic Optimality

from Part III - Dynamic Choice

Published online by Cambridge University Press:  14 January 2025

Tomasz Strzalecki
Tomasz Strzalecki
Affiliation:
Harvard University, Massachusetts
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Summary

Agents are forward-looking and incorporate their future behavior into today’s decisions. This is captured by the Bellman equation. We break this axiomatically into preference for flexibility and rational expectations.

Keywords

Bellman equationpreference for flexibilitysophisticationrational expectations
Type
Chapter
Information
Stochastic Choice Theory , pp. 112 - 119
Publisher: Cambridge University Press
Print publication year: 2025

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  • Dynamic Optimality
  • Tomasz Strzalecki, Harvard University, Massachusetts
  • Book: Stochastic Choice Theory
  • Online publication: 14 January 2025
  • Chapter DOI: https://doi.org/10.1017/9781009512749.012
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  • Dynamic Optimality
  • Tomasz Strzalecki, Harvard University, Massachusetts
  • Book: Stochastic Choice Theory
  • Online publication: 14 January 2025
  • Chapter DOI: https://doi.org/10.1017/9781009512749.012
Available formats
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Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • Dynamic Optimality
  • Tomasz Strzalecki, Harvard University, Massachusetts
  • Book: Stochastic Choice Theory
  • Online publication: 14 January 2025
  • Chapter DOI: https://doi.org/10.1017/9781009512749.012
Available formats
×