Empirical evidence suggests that the rich have higher propensity to save than do poor. While this observation may appear contradict homotheticity of preferences, we theoretically show is not case. Specifically, consider an income fluctuation problem with homothetic preferences and general shocks prove consumption functions are asymptotically linear, exact analytical characterization asymptotic ...

Abstract Rate distortion theory is concerned with optimally encoding signals from a given signal class $$\mathcal {S}$$ S using budget of R bits, as $$R \rightarrow \infty $$ R → ∞ . We say that can be compressed at rate s if we achieve...