Effect of labour income on the optimal bankruptcy problem
研究了有初始债务的代理人如何最优分配消费、风险资产投资和闲暇时间，并分析劳动收入对破产决策的影响，对理解个人财务决策有用。
In this paper we deal with the optimal bankruptcy problem for agents who can optimally allocate their consumption rate, the amount of capital invested in the risky asset, as well as their leisure time. In our framework, the agents are endowed by an initial debt, and they are required to repay their debt continuously. Declaring bankruptcy, the debt repayment is exempted at the cost of a wealth shrinkage. We implement the duality method to solve the problem analytically and conduct a sensitivity analysis to the bankruptcy cost and benefit parameters. Introducing the flexible leisure/working rate, and therefore the labour income, into the bankruptcy model, we investigate its effect on the optimal strategies. Supplementary Information: The online version contains supplementary material available at 10.1007/s10479-023-05166-z.