Microeconomics

Utility functions, future consumption targets and subsistence thresholds

January 1, 2008

Ashok Guha

Brishti Guha

Abstract

If the consumers risk aversion behavior varies intertemporally and if the risk aversion coefficient on future consumption becomes very large, the consumer tends to aim at a fixed future consumption target. A by-product is a reinterpretation of subsistence theories of consumption.

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