Would a Rational Lucy Take Off without Assessing the Probability of a Crash Landing?
AbstractA random life expectancy and a positive relationship between the probability of dying and the degree of addiction are incorporated into a rational addiction model. The Becker-Murphy equality between the addictive commodity's full price and marginal utility is modified by discounting the market price and marginal utility of the addictive commodity by the probability of survival. The individual's negative appreciation of the addictive stock is reinforced by the diminishing survival prospects. The rate of change of the consumption of the addictive commodity is lower than that obtained when the effect of addiction on the probability of dying is ignored.
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Bibliographic InfoArticle provided by Eastern Economic Association in its journal Eastern Economic Journal.
Volume (Year): 26 (2000)
Issue (Month): 4 (Fall)
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Addiction; Individual; Utility;
Find related papers by JEL classification:
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- I12 - Health, Education, and Welfare - - Health - - - Health Production
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