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Pls have a look at this: http://imgur.com/FRfoP

This is a screenshot of my lecture notes, from economics. I know that the LHS refers to the utility the agent thinks she will get if she consumes tomorrow, but I don't know what the RHS is. Can anyone tell me what the RHS refers to?


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This is in the context of beta-delta discounting, where c0+c1 is the cost of doing the task, and b is the benefit from doing the action in all periods following the task.

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The right hand side is nothing but a series of symbols presented without context. –  Arkamis Dec 18 '12 at 21:00
    
this is in the context of calculating present values, if that helps –  wwokkie Dec 18 '12 at 22:04
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Unfortunately, it doesn't help at all. Those symbols are completely undefined as far as I, or anyone else here, can tell. You should fully write out the question, state what things mean, and state what you know. Only then can you hope to receive an answer. –  Arkamis Dec 18 '12 at 22:06
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1 Answer 1

In the second line of the formula we see $$ (1 - \beta \delta) (c_0 + c_1) \leq \beta \delta b $$.

Divide boths sides by the first factor on the LHS, $$ (c_0 + c_1) \leq \frac{\beta \delta }{1 - \beta \delta} \cdot b$$.

The RHS can then be interpreted as the value of the benefit discounted as a perpetuity beginning in the next period.

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