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  • Simple Value Function Iteration

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    Kalyan_ralla
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    The document presents a utility function and value function over multiple time periods (V1-V5) for different levels of current and future cake (W). It shows: - The utility function is the natural log of consumption (c) plus a discounted value function for the future (βVt+1(W')). - The value functions V1-V5 decrease as the level of cake W decreases, ranging from -13.81551 to -46.44222. - Higher levels of future cake lead to higher value function levels across periods.

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    The document presents a utility function and value function over multiple time periods (V1-V5) for different levels of current and future cake (W). It shows: - The utility function is the natural log of consumption (c) plus a discounted value function for the future (βVt+1(W')). - The value functions V1-V5 decrease as the level of cake W decreases, ranging from -13.81551 to -46.44222. - Higher levels of future cake lead to higher value function levels across periods.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    Download as xlsx, pdf, or txt
    12 views4 pages

    Simple Value Function Iteration

    Uploaded by

    Kalyan_ralla
    The document presents a utility function and value function over multiple time periods (V1-V5) for different levels of current and future cake (W). It shows: - The utility function is the natural log of consumption (c) plus a discounted value function for the future (βVt+1(W')). - The value functions V1-V5 decrease as the level of cake W decreases, ranging from -13.81551 to -46.44222. - Higher levels of future cake lead to higher value function levels across periods.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    of 4

    utility function: ln(c)

    beta 0.8 Vt 1(W )  max u(W 


    epsilon 0.000001 W'
    W V1(W) V2(W) V3(W) V4(W) V5(W)
    0 -13.81551 -24.86792 -33.70985 -40.78339 -46.44222
    0.2 -1.609438 -12.66184 -21.50377 -28.57731 -34.23614
    0.4 -0.916291 -2.896983 -11.73891 -18.81245 -24.47128
    0.6 -0.510826 -2.203839 -3.92702 -11.00056 -16.65939
    0.8 -0.223144 -1.649321 -3.233875 -4.751049 -10.40988
    1 0 -1.243857 -2.679359 -4.057904 -5.410272

    future cake
    0 0.2 0.4 0.6 0.8 1
    Value of future cake
    -13.81551 -1.609438 -0.916291 -0.510826 -0.223144 0
    current cake 0 -24.86792 -24.86792
    0.2 -12.66184 -15.10306 -12.66184
    0.4 -11.9687 -2.896983 -14.54854 -2.896983
    0.6 -11.56323 -2.203839 -2.342465 -14.22417 -2.203839
    0.8 -11.27555 -1.798374 -1.649321 -2.018093 -13.99403 -1.649321
    1 -11.05241 -1.510693 -1.243857 -1.324949 -1.787948 -13.81551 -1.243857

    0
    0 0.2 0.4 0.6 0.8 1 1.2
    -5
    -10
    -15
    V1(W)
    -20
    V2(W)
    -25 V3(W)
    V4(W)
    -30
    V5(W)
    -35
    -40
    -45
    -50
    )  max u(W  W ')  Vt (W ')
    W'

    future cake
    0 0.2 0.4 0.6 0.8 1
    Value of future cake
    -24.86792 -12.66184 -2.896983 -2.203839 -1.649321 -1.243857
    current cake 0 -33.70985 -33.70985
    0.2 -21.50377 -23.94498 -21.50377
    0.4 -20.81062 -11.73891 -16.1331 -11.73891
    0.6 -20.40516 -11.04576 -3.92702 -15.57858 -3.92702
    0.8 -20.11748 -10.6403 -3.233875 -3.372504 -15.13497 -3.233875
    1 -19.89433 -10.35262 -2.828411 -2.679359 -2.92889 -14.8106 -2.679359
    `

    future cake
    0 0.2 0.4 0.6 0.8 1
    Value of future cake
    -33.70985 -21.50377 -11.73891 -3.92702 -3.233875 -2.679359
    current ca 0 -40.78339 -40.78339
    0.2 -28.57731 -31.01853 -28.57731
    0.4 -27.88416 -18.81245 -23.20664 -18.81245
    0.6 -27.4787 -18.1193 -11.00056 -16.95713 -11.00056
    0.8 -27.19102 -17.71384 -10.30741 -4.751049 -16.40261 -4.751049
    1 -26.96788 -17.42616 -9.901949 -4.057904 -4.196533 -15.959 -4.057904
    future cake
    0 0.2 0.4 0.6 0.8 1
    Value of future cake
    -40.78339 -28.57731 -18.81245 -11.00056 -4.751049 -4.057904
    current ca 0 -46.44222 -46.44222
    0.2 -34.23614 -36.67736 -34.23614
    0.4 -33.543 -24.47128 -28.86547 -24.47128
    0.6 -33.13753 -23.77814 -16.65939 -22.61596 -16.65939
    0.8 -32.84985 -23.37267 -15.96625 -10.40988 -17.61635 -10.40988
    1 -32.62671 -23.08499 -15.56078 -9.716734 -5.410272 -17.06183 -5.410272

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