Optimal decisions over time and strange attractors: an analysis by the Bellman principle

AbstractThe presence of chaotic behavior in optimization models, with finite and infinite horizon, is extensively discussed by using dynamic programming. A density theorem is given. By it the existence of chaotic paths is proved when the discount factor is small enough. Besides, many examples which lead to well-known strange attractors are given and studied. Moreover, the relation among myopia, impatience and chaos is analyzed, and the bifurcational aspects are stressed