Myopia And Addictive Behaviour  

Oleh:

Orphanides, Athanasios ; Zervos, David

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Economic Journal (EBSCO) vol. 108 no. 446 (Jan. 1998), page 75-91.
Fulltext: 75.pdf (271.63KB)

Isi artikel

We present a theory of addictive behaviour which can account for addicts' apparent disregard for the future consequences of their current actions. The discounting of future utility is increasing in past consumption, indicating increasingly myopic behaviour as consumption increases. The intertemporal complementarity generated by the endogenous discounting produces multiple steady states which can account for the simultaneous existence of myopic addicts and non-myopic non-addicts within a time consistent expected utility framework. The theory also accounts for the probabilistic incidence of addiction and successful rehabilitation and the possibility of recurrence.

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