Optimal Consumption and Insurance: A Continuous-time Markov Chain Approach

2008 ◽  
Vol 38 (1) ◽  
pp. 231-257 ◽  
Author(s):  
Holger Kraft ◽  
Mogens Steffensen
Keyword(s):  
Continuous Time ◽  
Optimal Solution ◽  
Decision Problems ◽  
Optimal Consumption ◽  
Continuous Time Markov Chain ◽  
Financial Decision Making ◽  
Markov Chain Approach ◽  
Special Cases ◽  
Financial Decision ◽  
The Individual

Personal financial decision making plays an important role in modern finance. Decision problems about consumption and insurance are in this article modelled in a continuous-time multi-state Markovian framework. The optimal solution is derived and studied. The model, the problem, and its solution are exemplified by two special cases: In one model the individual takes optimal positions against the risk of dying; in another model the individual takes optimal positions against the risk of losing income as a consequence of disability or unemployment.

Optimal Consumption and Insurance: A Continuous-time Markov Chain Approach

2008 ◽  
Vol 38 (01) ◽  
pp. 231-257 ◽  
Author(s):  
Holger Kraft ◽  
Mogens Steffensen
Keyword(s):  
Continuous Time ◽  
Optimal Solution ◽  
Decision Problems ◽  
Optimal Consumption ◽  
Continuous Time Markov Chain ◽  
Financial Decision Making ◽  
Markov Chain Approach ◽  
Special Cases ◽  
Financial Decision ◽  
The Individual

Personal financial decision making plays an important role in modern finance. Decision problems about consumption and insurance are in this article modelled in a continuous-time multi-state Markovian framework. The optimal solution is derived and studied. The model, the problem, and its solution are exemplified by two special cases: In one model the individual takes optimal positions against the risk of dying; in another model the individual takes optimal positions against the risk of losing income as a consequence of disability or unemployment.

Review of Family Financial Decision Making: Suggestions for Future Research and Implications for Financial Education

2017 ◽  
Vol 28 (2) ◽  
pp. 253-267 ◽  
Author(s):  
Jinhee Kim ◽  
Michael S. Gutter ◽  
Taylor Spangler
Keyword(s):  
Decision Making ◽  
Decision Process ◽  
Family System ◽  
Financial Education ◽  
Future Research ◽  
Financial Decisions ◽  
Individual Level ◽  
Financial Decision Making ◽  
Financial Decision ◽  
The Individual

This article reviews the theories and literature in intrahousehold financial decisions, spousal partners and financial decision making, family system and financial decision process, children, and financial decisions. The article draws conclusions from the literature review and discusses directions for future research and educational programs. Most financial education and counseling takes place at the individual level, whereas financial decisions take place at household and intrahousehold levels. Family members, spouses/partners, children, and others play a key role in individuals’ financial decisions. The article proposes the key programmatic implications for financial professionals and educators that need to be integrated into financial education and counseling. Understanding the unique dynamics of family financial decision making would help create effective educational and counseling strategies for the whole families.

scholarly journals Field Dependence / Field Independence as a Factor of Financial Decision Making With Varying Degrees of Risk Among Students

2020 ◽  
Vol 8 (Special issue) ◽  
pp. 113-120
Author(s):  
Tatiana Belykh ◽  
Zinchenko Ekaterina Mikhailovna
Keyword(s):  
Decision Making ◽  
Decision Strategy ◽  
Field Independence ◽  
Financial Decision Making ◽  
Interdisciplinary Field ◽  
Financial Decision ◽  
The Subject ◽  
Financial Behaviour ◽  
The Individual ◽  
Oculomotor Activity

Currently, a new interdisciplinary field of research – financial behaviour-is rapidly developing. Psychological characteristics of the subject of financial behaviour can have a significant impact on the decision-making process in this field. Cognitive style, as an individual way of processing the information perceived by the subject, is one of the factors determining such procedural features of financial decision-making as: the time spent on decision – making, the speed of decision-making, the emotional state of the individual during decision-making, the nature of perceptual information processing (especially oculomotor activity), as well as the type of decision strategy - rational, irrational or marginal.

A continuous-time Markov chain approach with the analytic likelihood in studies of behavioral changes

2018 ◽  
Vol 48 (23) ◽  
pp. 5756-5765
Author(s):  
Ho-Lan Peng ◽  
Andrew Aschenbrenner ◽  
Kirk von Sternberg ◽  
Patricia D. Mullen ◽  
Wenyaw Chan
Keyword(s):  
Markov Chain ◽  
Continuous Time ◽  
Behavioral Changes ◽  
Continuous Time Markov Chain ◽  
Markov Chain Approach

Reliability Analysis Based on Nonhomogeneous Continuous-Time Markov Modeling with Application to Repairable Pumps of a Power Plant

2017 ◽  
Vol 24 (01) ◽  
pp. 1750004 ◽  
Author(s):  
Yao Hsu ◽  
Wen Fang Wu ◽  
Tai Wei Huang
Keyword(s):  
Markov Chain ◽  
Power Plant ◽  
Continuous Time ◽  
Life Cycle Cost ◽  
Optimal Solution ◽  
Markov Modeling ◽  
Local Power ◽  
Continuous Time Markov Chain ◽  
Power Outage ◽  
Proposed Model

To avoid equipment breakdown that may result in power outage, equipment maintenance is very important. However, maintenance is always accompanied with cost and operating performance. Finding a balance between reducing risk of power outage and increasing cost through maintenance becomes an important issue for power plant owners. To this end, a repair-related analytical model by nonhomogeneous continuous-time Markov chain is constructed in this study. To consider the maintenance process which accords with the actual situations, we add not only the effect of time but also environmental factors for failure rate and repair rate into consideration to describe uncertainties of the process. Since it is difficult to obtain the analytic solution of transition rate in a nonhomogeneous continuous-time Markov chain, we propose a method to find the numerical solution. In the end, the failure and repair data of pumps of a local power plant are applied into the proposed model. An optimal solution in consideration of the life cycle cost under a certain availability constraint is found through the model.

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