Learning from zero: how to make consumption-saving decisions in a stochastic environment with an AI algorithm

This exercise proposes a learning mechanism to model economic agent's decision-making process using an actor-critic structure in the literature of artificial intelligence. It is motivated by the psychology literature of learning through reinforcing good or bad decisions. In a model of an environment, to learn to make decisions, this AI agent needs to interact with its environment and make explorative actions. Each action in a given state brings a reward signal to the agent. These interactive exp...