A remark on Samuelson's variational principle in economics (Q1644240): Difference between revisions

The authors consider optimization problem consisting in maximizing the functional \[ J(K_1,K_2) = \int_0^T (p_1(t) K_1(t) + p_2(t) K_2(t))e^{-rt} dt \] subject to \[ F(K_1(t), K_2(t), dK_1(t)/dt, dK_2(t)/dt) = 0, \] and given initial and terminal values \(K_1(0), K_2(0)\). Since the Lagrange multipliers method has the difficulty in identifying the Lagrange multiplier, Kataoka and Hashimoto proposed a method to overcome this problem. This method uses the Noether theorem. The main result in the present paper is a new approach obtaining the optimal solution of the maximization problem without Lagrange multiplier and without the Noether theorem. The optimal solution is obtained either by making use of variational iteration method or by homotopy perturbation method.