= = Exercise 1: Suppose that you discount the future (quasi-)hyperbolically with = 1/4 and 8 = 2/3. You are on a diet and have to make a very tough choice between (I) and (II): (1) Eat cake on Saturday (u = 4) and workout on Sunday (u = 0) I (II) Forego cake on Saturday (u = 1) and relax on Sunday (u = 6) = = = = (a) From the point of view of Friday, what is the utility of eating the cake [U()] and of skipping it [U(d)] ? Which would you prefer? (b) From the point of view of Saturday, what is the utility of eating the cake [U(c)] and of skipping it [U(d)] ? Which would you prefer? = = Exercise 1: Suppose that you discount the future (quasi-)hyperbolically with = 1/4 and 8 = 2/3. You are on a diet and have to make a very tough choice between (I) and (II): (1) Eat cake on Saturday (u = 4) and workout on Sunday (u = 0) I (II) Forego cake on Saturday (u = 1) and relax on Sunday (u = 6) = = = = (a) From the point of view of Friday, what is the utility of eating the cake [U()] and of skipping it [U(d)] ? Which would you prefer? (b) From the point of view of Saturday, what is the utility of eating the cake [U(c)] and of skipping it [U(d)] ? Which would you prefer