In this paper we study the role of habit formation in shaping the wealth distribution in an otherwise standard heterogeneous agents model economy with idiosyncratic uncertainty. We compare the inplications for precautionary savings and for wealth concentration between economies that only differ in the role played by habit formation. Once preferences are properly adjusted so that the Intertempor...

Abstract This paper studies a composite problem involving decision-making about the optimal entry time and dynamic consumption afterwards. In Stage 1, investor has access to full market information subject some costs needs choose an stopping initiate 2; in 2, terminates costly acquisition starts investment under partial observation of free public stock prices. Habit formation preferences are em...

In this paper, we analytically solve the utility maximization problem for a consumption set with multiple habit formation of interaction. Consumption is here composed habitual and nonhabitual components, where represents effect past consumption. We further assume that individual seeks to maximize his/her expected from Although there usually no explicit solution linear dynamic systems in model, ...