Week 10 Homework Feedback: Lorenzo Ilari

Overall Assessment

Grade: ✅ (Pass)

Correct submission. You implemented EGM correctly and performed the required simulations.

Task-by-Task Check

Task 1: Quantifying Precautionary Savings

  1. Parameter & Grid Setup: ✅ Correct.
  2. Solution Method: ✅ EGM implemented correctly.
  3. Deterministic Case: ✅ Solved.
  4. Stochastic Case: ✅ Solved.
  5. Simulation: ✅ Simulation logic is correct.
  6. Comparison: ✅ Premium calculated.

Task 2: The Role of Risk Aversion

  1. Sigma Variation: ✅ Implemented.
  2. Solving Sigma Cases: ✅ Solved.
  3. Policy Plot: ✅ Plotted.
  4. Simulation Comparison: ✅ Calculated.
  5. Interpretation: ✅ Correct.

Technical Implementation

  • EGM Logic: The implementation in your script is correct.
  • Hybrid Approach: You used fzero to invert the resource constraint (Step 4).
  • Code Organization: Separation into Task 1 and Task 2 sections is clear.

Visual Output

  • No figures were explicitly saved in the script provided, but the logic to generate results is there.

Suggestions for Improvement

  1. Efficiency: Replacing the fzero loop with interpolation would speed up the EGM step.
  2. Figures: Ensure you save the plots (e.g., using saveas or exportgraphics) to document your results visually.

Summary

11/11 tasks correct. Correct work.