4 Two-Period Model: State-Preference Approach

  • Thorsten Hens
  • Marc Oliver Rieger
Part of the Springer Texts in Business and Economics book series (STBE)


Consider a two-period economy with uncertainty in the second period. Consumption is in terms of a single consumer good. In the second period there are S many possible states and every consumer aims to maximize the consumption across states. There are I many consumers with utility functions Ui(strictly increasing, concave and continuous). The consumption good has a price πs in each state.

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© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  • Thorsten Hens
    • 1
  • Marc Oliver Rieger
    • 2
  1. 1.Department of Banking and FinanceUniversity of ZurichZürichSwitzerland
  2. 2.Department of Business AdministrationUniversity of TrierTrierGermany

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