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Do Addicts Behave Rationally?

Author

Listed:
  • Ernst Fehr
  • Peter K. Zych

Abstract

The theory of rational addiction assumes that addicts' behavior is fully rational. Common sense and psychological introspection suggest, however, that addictive behavior is irrational. Without knowledge of the addicts' preferences this dispute cannot be resolved. This paper reports the results of an experiment in which addictive preferences were induced. It turns out that ‘addicts’ consume systematically too much compared to the optimal consumption decision. We explain this systematic excess consumption in terms of the psychologically salient features of addictive goods.

Suggested Citation

  • Ernst Fehr & Peter K. Zych, 1998. "Do Addicts Behave Rationally?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(3), pages 643-661, September.
    • Handle: RePEc:bla:scandj:v:100:y:1998:i:3:p:643-661
    DOI: 10.1111/1467-9442.00127
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    Cited by:

    1. Vivian Lei & Charles N. Noussair, 2002. "An Experimental Test of an Optimal Growth Model," American Economic Review, American Economic Association, vol. 92(3), pages 549-570, June.
    2. Kay Blaufus & Michael Milde, 2021. "Tax Misperceptions and the Effect of Informational Tax Nudges on Retirement Savings," Management Science, INFORMS, vol. 67(8), pages 5011-5031, August.
    3. Blaufus, Kay & Milde, Michael, 2018. "Learning to save tax-efficiently: Tax misperceptions and the effect of informational tax nudges on retirement savings," arqus Discussion Papers in Quantitative Tax Research 225, arqus - Arbeitskreis Quantitative Steuerlehre.
    4. Takanori Ida, 2014. "A quasi-hyperbolic discounting approach to smoking behavior," Health Economics Review, Springer, vol. 4(1), pages 1-11, December.
    5. Sophie Massin, 2011. "La notion d'addiction en économie : La théorie du choix rationnel à l'épreuve," Revue d'économie politique, Dalloz, vol. 121(5), pages 713-750.
    6. John Duffy & Yue Li, 2016. "Lifecycle Consumption Under Different Income Profiles: Experimental Evidence," Working Papers 161702, University of California-Irvine, Department of Economics.
    7. Blondel, Serge & Loheac, Youenn & Rinaudo, Stephane, 2007. "Rationality and drug use: An experimental approach," Journal of Health Economics, Elsevier, vol. 26(3), pages 643-658, May.
    8. Ole Rogeberg, 2003. "Preferences, Rationality and Welfare in Becker's Extended Utility Approach," Rationality and Society, , vol. 15(3), pages 283-323, August.
    9. Carbone, Enrica & Duffy, John, 2014. "Lifecycle consumption plans, social learning and external habits: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 106(C), pages 413-427.
    10. Klaus Abbink & Heike Hennig-Schmidt, 2006. "Neutral versus loaded instructions in a bribery experiment," Experimental Economics, Springer;Economic Science Association, vol. 9(2), pages 103-121, June.
    11. Clark, Andrew & Etile, Fabrice, 2002. "Do health changes affect smoking? Evidence from British panel data," Journal of Health Economics, Elsevier, vol. 21(4), pages 533-562, July.
    12. Smith, Trenton G. & Tasnadi, Attila, 2007. "A theory of natural addiction," Games and Economic Behavior, Elsevier, vol. 59(2), pages 316-344, May.
    13. Florina Salaghe & Dimitra Papadovasilaki & Federico Guerrero & James Sundali, 2020. "Temptation and Retirement Accounts: A Story of Time Inconsistency and Bounded Rationality," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 6(3), pages 173-198, April.
    14. Enrica Carbone & Gerardo Infante, 2014. "Comparing behavior under risk and under ambiguity in a lifecycle experiment," Theory and Decision, Springer, vol. 77(3), pages 313-322, October.
    15. Maria Isabel Clímaco & Luís Moura Ramos, 2004. "Questioning Rationality: The case for risk consumption," Notas Económicas, Faculty of Economics, University of Coimbra, issue 20, pages 177-191, December.
    16. Grabner, Christian & Hahn, Heiko & Leopold-Wildburger, Ulrike & Pickl, Stefan, 2009. "Analyzing the sustainability of harvesting behavior and the relationship to personality traits in a simulated Lotka-Volterra biotope," European Journal of Operational Research, Elsevier, vol. 193(3), pages 761-767, March.
    17. Duffy, John & Li, Yue, 2019. "Lifecycle consumption under different income profiles: Evidence and theory," Journal of Economic Dynamics and Control, Elsevier, vol. 104(C), pages 74-94.
    18. Fehr, Ernst & Zych, Peter K., 2008. "Intertemporal Choice under Habit Formation," Handbook of Experimental Economics Results, in: Charles R. Plott & Vernon L. Smith (ed.), Handbook of Experimental Economics Results, edition 1, volume 1, chapter 98, pages 923-928, Elsevier.
    19. Apesteguia, Jose, 2001. "A Characterization of Melioration in Game Theoretic Frameworks," Bonn Econ Discussion Papers 26/2001, University of Bonn, Bonn Graduate School of Economics (BGSE).
    20. Koehler, Derek J. & Langstaff, Jesse & Liu, Wu-Qi, 2015. "A simulated financial savings task for studying consumption and retirement decision making," Journal of Economic Psychology, Elsevier, vol. 46(C), pages 89-97.
    21. John Duffy & Enrica Carbone, 2013. "Lifecycle Consumption Plans, Social Learning and External Habits: Experimental Evidence," Working Paper 513, Department of Economics, University of Pittsburgh, revised Sep 2013.
    22. Martin Angerer & Michael Hanke & Ekaterina Shakina & Wiebke Szymczak, 2025. "The Effect of Different Saving Mechanisms in Pension Saving Behavior: Evidence from a Life-Cycle Experiment," JRFM, MDPI, vol. 18(5), pages 1-26, May.
    23. Jacobs Martin, 2016. "Accounting for Changing Tastes: Approaches to Explaining Unstable Individual Preferences," Review of Economics, De Gruyter, vol. 67(2), pages 121-183, August.
    24. Takanori Ida, 2012. "Impatience and Immediacy: A Quasi-Hyperbolic Discounting Approach to Smoking Behavior," Discussion papers e-11-010, Graduate School of Economics Project Center, Kyoto University.

    More about this item

    JEL classification:

    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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