In economics, the overtaking criterion is used to compare infinite streams of outcomes. Mathematically, it is used to properly define a notion of optimality for a problem of optimal control on an unbounded time interval.[1]
Often, the decisions of a policy-maker may have influences that extend to the far future. Economic decisions made today may influence the economic growth of a nation for an unknown number of years into the future. In such cases, it is often convenient to model the future outcomes as an infinite stream. Then, it may be required to compare two infinite streams and decide which one of them is better (for example, in order to decide on a policy). The overtaking criterion is one option to do this comparison.
- ^ Carlson, D. A.; Haurie, A. B.; Leizarowitz, A. (1991). "Definition of Optimality on an Unbounded Time Interval". Infinite Horizon Optimal Control. Berlin: Springer. pp. 9–17. ISBN 3-540-54249-3.