Radial Basis Functions accuracy stability variational problems Dynamic Investment problem
Issue Date:
2015
Publisher:
Institute of Mathematics and Informatics at the Bulgarian Academy of Sciences
Citation:
Pliska Studia Mathematica Bulgarica, Vol. 25, No 1, (2015), 167p-174p
Abstract:
In this paper we consider a Dynamic investment model. In the model, firm’s objective is maximizaing discounted sum of profits over an interval of time. The model assumes that firm’s capital in time t increases with investment and decreases with depreciation rate that can be expressed by means of differential equation. We propose a direct method for solving the problem based on Radial Basis Functions(RBFs). The authors describe operational matrices of RBFs and use them to reduce the variational problem to a static optimization problem which can be solved via some optimization techniques. Next, we describe some economic interpretation of the solution. Finally, the accuracy and stability of the Multiquadric (MQ), and Gaussian (GA) RBFs are illustrated by conducting some numerical experiments. 2010 Mathematics Subject Classification: 49Mxx; Secondary 37Mxx.
