The rigidity of choice: lifetime savings under information-processing constraints

This paper studies the implications of information-processing limits on the consumption and savings behavior of households through time. It presents a dynamic model in which consumers rationally choose the size and scope of the information they want to process about their fi�nancial possibilities, constrained by a Shannon channel. The model predicts that people with higher degrees of risk aversion rationally choose higher information. This happens for precautionary reasons since, with fi�nite processing rate, risk averse consumers prefer to be well informed about their fi�nancial possibilities before implementing consumption plan. Moreover, numerical results show that consumers with processing capacity constraints have asymmetric responses to shocks, with negative shocks producing more persistent effects than positive ones. This asymmetry results into more savings. I show that the predictions of the model can be effectively used to study the impact of tax reforms on consumers spending. The results are qualitatively consistent with the evidence on tax rebates (2001, 2008).Consumption, Rational Inattention, Dynamic programming

Optimal Sequence-Based Control of Networked Linear Systems

In Networked Control Systems (NCS), components of a control loop are connected by data networks that may introduce time-varying delays and packet losses into the system, which can severly degrade control performance. Hence, this book presents the newly developed S-LQG (Sequence-Based Linear Quadratic Gaussian) controller that combines the sequence-based control method with the well-known LQG approach to stochastic optimal control in order to compensate for the network-induced effects

Research on optimal control, stabilization and computational algorithms for aerospace applications

The research carried out in the areas of optimal control and estimation theory and its applications under this grant is reviewed. A listing of the 257 publications that document the research results is presented

Dynamic Monitoring and Control of Irreversible Chronic Diseases with Application to Glaucoma

Peer Reviewedhttps://deepblue.lib.umich.edu/bitstream/2027.42/149269/1/poms12975_am.pdfhttps://deepblue.lib.umich.edu/bitstream/2027.42/149269/2/poms12975-sup-0001-Appendix.pdfhttps://deepblue.lib.umich.edu/bitstream/2027.42/149269/3/poms12975.pd

Consumption dynamics under information processing constraints

This paper studies how "rational inattention" (RI)-a type of information processing constraint proposed by Sims [Sims, C.A., 2003. Implications of rational inattention, Journal of Monetary Economics 50 (3), 665-690]-affects the joint dynamics of consumption and income in a permanent income model with general income processes. Specifically, I propose an analytical approach to solve the multivariate permanent income model with RI and examine its implications for optimal consumption, saving, and welfare. It is shown that RI can affect the relative volatility of consumption and provide an endogenous propagation mechanism that disentangles the short-run and long-run responses of consumption to exogenous income shocks. I also explore how aggregation reduces the impact of the RI-induced endogenous noise on consumption and thus increases the smoothness of aggregate consumption. Finally, I compare RI with four alternative hypotheses (habit formation, signal extraction, robustness, and inattentiveness) by examining their implications for the joint behavior of consumption and income. © 2007 Elsevier Inc. All rights reserved.postprin