On the reservation wage under CARA and limited borrowing

✍ Scribed by Christian Bauer

• Publisher: Elsevier Science
• Year: 2011
• Tongue: English
• Weight: 264 KB
• Volume: 62
• Category: Article
• ISSN: 0165-4896
• DOI: 10.1016/j.mathsocsci.2010.10.005

✦ Synopsis

An individual's optimal behavior in a continuous-time sequential job search model with savings and CARA preferences is characterized analytically. I isolate the effects of limited borrowing and nonnegative consumption as well as risk aversion on the reservation wage by using a system of ordinary differential equations.