transversality condition

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English[edit]

Etymology[edit]

To quote from Optimization in economics and finance [1]

This terminal condition on λ(T) has often been called a transversality condition, for historical reasons deriving from time-optimal problems, where the (variable) time T to reach a target is minimized. In that situation, the transversality condition appears as a description of how the optimal path crosses a terminal line (graphing state against T[)]

Noun[edit]

transversality condition (plural transversality conditions)

  1. (economics) A terminal condition on a costate variable in a, usually infinite, time optimization problem.

References[edit]

  1. ^ 2005, Bruce Desmond Craven, Sardar M. N. Islam, Optimization in economics and finance: