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Addiction and Cue-Conditioned Cognitive Processes

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  • B. Douglas Bernheim
  • Antonio Rangel

Abstract

We propose an economic theory of addiction based on the premise that cognitive mechanisms such as attention affect behavior independently of preferences. We argue that the theory is consistent with foundational evidence (e.g. from neurosciencee and psychology) concerning the nature of decision-making and addiction. The model is analytically tractable, and it accounts for a broad range of stylized facts concerning addiction. It also generates a plausible qualitative mapping from the characteristics of substances into consumption patterns, thereby providing a basis for empirical tests. Finally, the theory provides a clear standard for evaluating social welfare, and it has a number of striking policy implications.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9329.

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Date of creation: Nov 2002
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Handle: RePEc:nbr:nberwo:9329

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  1. Becker, Gary S & Murphy, Kevin M, 1988. "A Theory of Rational Addiction," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 96(4), pages 675-700, August.
  2. O'Donoghue, Ted & Rabin, Matthew, 1997. "Doing It Now or Later," Department of Economics, Working Paper Series, Department of Economics, Institute for Business and Economic Research, UC Berkeley qt7t44m5b0, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  3. Athanasios Orphanides & David Zervos, 1992. "Rational addiction with learning and regret," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 216, Board of Governors of the Federal Reserve System (U.S.).
  4. Jeffrey A. Miron & Jeffrey Zwiebel, 1995. "The Economic Case against Drug Prohibition," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 9(4), pages 175-192, Fall.
  5. Faruk Gul & Wolfgang Pesendorfer, 2001. "Temptation and Self-Control," Econometrica, Econometric Society, Econometric Society, vol. 69(6), pages 1403-1435, November.
  6. Frank J. Chaloupka & Kenneth E. Warner, 1999. "The Economics of Smoking," NBER Working Papers 7047, National Bureau of Economic Research, Inc.
  7. George Loewenstein, Ted O'Donoghue and Matthew Rabin., 2000. "Projection Bias in Predicting Future Utility," Economics Working Papers, University of California at Berkeley E00-284, University of California at Berkeley.
  8. Loewenstein, George, 1996. "Out of Control: Visceral Influences on Behavior," Organizational Behavior and Human Decision Processes, Elsevier, Elsevier, vol. 65(3), pages 272-292, March.
  9. O’Donoghue, Ted & Rabin, Matthew, 2002. "Addiction and Present-Biased Preferences," Department of Economics, Working Paper Series, Department of Economics, Institute for Business and Economic Research, UC Berkeley qt3v86x53j, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  10. Laibson, David I., 1997. "Golden Eggs and Hyperbolic Discounting," Scholarly Articles 4481499, Harvard University Department of Economics.
  11. Jonathan Gruber & Botond Köszegi, 2001. "Is Addiction "Rational"? Theory And Evidence," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 116(4), pages 1261-1303, November.
  12. Laibson, David I., 2000. "A Cue-Theory of Consumption," Scholarly Articles 4481496, Harvard University Department of Economics.
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Citations

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Cited by:
  1. Smith, Trenton G. & Tasnadi, Attila, 2007. "A theory of natural addiction," Games and Economic Behavior, Elsevier, Elsevier, vol. 59(2), pages 316-344, May.
  2. Camelia Kuhnen & Brian Knutson, 2005. "The Neural Basis of Financial Risk Taking," Experimental, EconWPA 0509001, EconWPA.
  3. Kevin X.D. Huang & Zheng Liu & John Q. Zhu, 2013. "Temptation and self-control: some evidence and applications," Working Paper Series, Federal Reserve Bank of San Francisco 2013-23, Federal Reserve Bank of San Francisco.
  4. D.Dragone, 2005. "Incoerenza Dinamica ed Autocontrollo: Proposta per un'Analisi Interdisciplinare," Working Papers 549, Dipartimento Scienze Economiche, Universita' di Bologna.
  5. López Rafael, 2006. "Addiction and Self-Control: An Intrapersonal Game," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE.
  6. Grignon, Michel, 2009. "An empirical investigation of heterogeneity in time preferences and smoking behaviors," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 38(5), pages 739-751, October.
  7. David Backus & Bryan Routledge & Stanley Zin, 2004. "Exotic Preferences for Macroeconomists," Working Papers, New York University, Leonard N. Stern School of Business, Department of Economics 04-20, New York University, Leonard N. Stern School of Business, Department of Economics.
  8. Kevin X. D. Huang & Zheng Liu & Qi Zhu, 2005. "Temptation and Self-Control: Some Evidence from the Consumer Expenditure Survey," Emory Economics, Department of Economics, Emory University (Atlanta) 0507, Department of Economics, Emory University (Atlanta).
  9. Steven M. Suranovic & Robert S. Goldfarb, 2005. "A Behavioral Model of Cyclical Dieting," HEW, EconWPA 0511002, EconWPA.
  10. Faruk Gul & Wolfgang Pesendorfer, 2005. "The Case for Mindless Economics," Levine's Working Paper Archive 784828000000000581, David K. Levine.
  11. Trenton Smith & Young H. Lee, 2006. "Why are Americans Addicted to Baseball? An Empirical Analysis of Fandom in Korea and the U.S," Working Papers, School of Economic Sciences, Washington State University 2006-05, School of Economic Sciences, Washington State University.
  12. Carlo Ciccarelli & Luigi Giamboni & Robert J. Waldmann, 2008. "Cigarette Smoking, Pregnancy, Forward Looking Behavior and Dynamic Inconsistency," CEIS Research Paper 132, Tor Vergata University, CEIS, revised 14 Nov 2008.
  13. Kuhnen, Camelia & Knutson, Brian, 2008. "The Influence of Affect on Beliefs, Preferences and Financial Decisions," MPRA Paper 10410, University Library of Munich, Germany.
  14. John Whalley, 2005. "Rationality, Irrationality and Economic Cognition," CESifo Working Paper Series 1445, CESifo Group Munich.
  15. Pirouz, Dante, 2004. "The Neuroscience of Consumer Decision-Making," MPRA Paper 2181, University Library of Munich, Germany, revised 30 Jan 2006.

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