David, Quentin; Janiak, Alexandre; Wasmer, Etienne - Institute for the Study of Labor (IZA) - 2008
(S) + EU2(S)g, (9)
where is a discount factor and the cost of investing in social capital S is C(S) with C0(S) > 0,
C00(S …) > 0. The key issue is thus to determine the quantity
EU2 =
Z w
0
Z w
0
maxfb + 1 S;w + S;w + (1 )SgdF(w)dG(w ). (10 …. Indeed, we show in Appendix that the expected utility of agents given
optimal choices is given by
EU2 = w + S
Z w
wr
G …