YALE UNIV NEW HAVEN CONN COWLES FOUNDATION FOR RESEARCH IN ECONOMICS
The model suggested here, which follows the idea of a salvage value for left over stock, used in dynamic programming, fails to capture some of the basic aspects of a multigenerational economy. We would like to consider the implications of an overlap such as is shown in Figure 1a where several generations whose lives overlap each other have to take care of the young and the old. Setting aside the extra problems posed by such a model we may regard our treatment as covering the case with successive but not overlapping generations. When one dies, the next is born and begins life with the capital stock left behind. There are several different ways we can explain the transfer of capital stock to successive generations. We may consider interlinked utility functions, love or altruism the external imposition of law or the design of a self-policing noncooperative game. The example presented in this paper is closest to the latter two approaches and is a direct extension of the type of models constructed previously by Shubik, Shapley and Shubik and Dubey and Shubik.