urgent queries isi

[ritu]

Consider an economy where the agents live for only two periods and
where there is only one good. The life-time utility of an agent is given
by U = u(c) + v(d), where u and v are the first and second period
utilities, c and d are the first and second period consumptions and 
is the discount factor.  lies between 0 and 1. Assume that both u
and v are strictly increasing and concave functions. In the first period,
income is w and in the second period, income is zero. The interest rate
on savings carried from period 1 to period 2 is r. There is a government
that taxes first period income. A proportion  of income is taken away
by the government as taxes. This is then returned in the second period
to the agent as a lump sum transfer T. The government’s budget is
balanced i.e., T = w. Set up the agent’s optimization problem and
write the first order condition assuming an interior solution. For given
values of r, , w, show that increasing T will reduce consumer utility
if the interest rate is strictly positive.

[ritu]

http://discussion-forum.2150183.n2.nabble.com/uniform-distribution-td7343364.html


in this link i will be grateful if somebody could explain that what happened after this point....

(by amit sir)
Let us restrict our attention to the strategies of the following nature:
He choose two cutoff points m(1) for the first test and m(2) for the second test and his policy will be to accept the first score if its greater than m(1) and reject otherwise, and to accept the second score if its greater than m(2) and reject otherwise. Clearly, the choice variables are m(1) and m(2). We will find these m(1) and m(2) so that the student maximize the expected score in the exam.
Expected score from policy (m(1), m(2)) is,
Expected Score (m(1), m(2)) = Pr(his first score is less than m(1)) Expected Score (m(1), m(2)| his first score is less than m(1)) + Pr(his first score is greater than m(1)) Expected Score (m(1), m(2)| his first score is greater than m(1))
Since the distribution is uniform,  
Pr(his first score is less than m(1)) = m(1)/100
Pr(his first score is greater than m(1)) = (100-m(1))/100


i did not understand what sir has written after this...:(

[Mr. Nobody]

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[ritu]

thanx a lot ram....just one thing more....there was a somewot similar intertemporal question in 2007....there its not mentioned whether person earn income or not in old age....so wot do u think we should tke old age income 0 or w?????????aditi told me to take it w but i think it should be zero....pls refer 2007 paper and let me know....
once again thanx a ton:)

[Mr. Nobody]

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