A Widely Used Utility Function in the Economics Literature Is

question 43

Essay

A widely used utility function in the economics literature is the constant rate of risk aversion utility function,of which log utility is a special case.It is given by.
With this utility function,the marginal utility of consumption is
.What is the Euler equation for this utility function? Show that if
,the Euler equation is the same as if we used log utility.

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Definitions:

LH Lesions

Damage to the left hemisphere of the brain, which can impact various cognitive functions and behaviors.

Body Set-Point

A theoretical mechanism within the human body that regulates metabolism to maintain a stable weight.

Maintain

To keep in an existing state or condition; to continue; to preserve from failure or decline.

Neurotransmitter

Chemical substances that transmit signals across a synapse from one neuron to another in the brain and nervous system.