Policy function calculation from value function iterations

We consider the following mixed two-state model with leisure utility:

Model 1

where

Each constant labor can be computed from

and

for state 1

and

for state 2

Differently from what we did in 0801, we calculate the each policy function separately and randomly pick their index number.

We also consider the following mixed two-state model with leisure utility:

Model 2

where

Each constant labor can be computed from

and

for state 1

and

for state 2

We also combine the changes of theta’s and function f’s at the same time.

Model 3

where

Each constant labor can be computed from

and

for state 1

and

for state 2