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Intertemporal optimization An agent lives for two periods: in the first period she works and in the second period she is retired. The income in

Intertemporal optimization

An agent lives for two periods: in the first period she works and in the second period she is retired. The income in coins (salary) for this agent is w1 > 0 and the income in coins (national pension) in second period is w2. The agent has the utility function. u = log(c1) + log(c2). Where c1 is consumption in the first period and c2 is consumption in the second period. We assume that > 0.

How do you interpret and what would be reasonable to assume about (besides > 0).?

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