Inter-temporal preferences Two periods model Indirect utility function of period 1 with w y(w)=maxu(C)+SEu(w-CR First order condition (c1)=6El(C2)R El(2)(R-R)=0Inter-temporal preferences • Two periods model: – Indirect utility function of period 1 with w. – First order condition: 1 1 1 , ( ) max ( ) ( ) c x V w u c Eu w c R = + −  1 2 2 1 0 ( ) ( ) ( )( ) 0 u c Eu c R Eu c R R  =   − =