econ-ark/HARK

HARK.rewards give positive utility to negative consumption

Opened this issue · 3 comments

sbenthall commented

The current implementation of CRRA utility and its derived methods give positive utility for negative consumption:

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While negative consumption cases are normally excluded by constraints in other parts of the library, this might throw off results in some cases.

alanlujan91 commented

A careful optimization, either via grid search or egm, should avoid this issue. Would you propose that it returns -infty or nan when consumption is negative?

sbenthall commented

Yes. I could see a case for either of those.

llorracc commented

It should be nan. Definitely.

What does "negative consumption" mean? There's no reasonable definition of it. So, it's not a number.