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Addiction and Self-Control: An Intrapersonal Game

Author

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  • López Rafael

Abstract

In their model of addiction, O´Donoghue and Rabin obtain a counterintuitive result: a person that is fully aware of his self-control problems (sophisticate) is more prone to become addicted than one who is fully naware (na¨ıf). In this paper we show that this result arises from their particular equilibrium selection for the induced intra-personal game. We provide dominating Markov Perfect equilibria where the paradox vanishes and that seem more natural" since they capture behaviors often observed in the realm of addiction. We also address the issue of why an unaddicted person could decide to start consuming and possibly develop an addiction. In particular, we show that their equilibrium implies that both naifs and sophisticates will slip into addiction. In contrast, by considering our results, only naifs will become addicted which is in accordance to the common intuition. Finally, we suggest a clear-cut way"

Suggested Citation

  • López Rafael, 2006. "Addiction and Self-Control: An Intrapersonal Game," Revista Desarrollo y Sociedad, Universidad de los Andes,Facultad de Economía, CEDE, August.
  • Handle: RePEc:col:000090:001944
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    File URL: http://economia.uniandes.edu.co/revistadys/Articulo58_9.pdf
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    References listed on IDEAS

    as
    1. B. Douglas Bernheim & Antonio Rangel, 2002. "Addiction and Cue-Conditioned Cognitive Processes," NBER Working Papers 9329, National Bureau of Economic Research, Inc.
    2. Jonathan Gruber & Botond Köszegi, 2001. "Is Addiction "Rational"? Theory and Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(4), pages 1261-1303.
    3. Juan D. Carrillo & Thomas Mariotti, 2000. "Strategic Ignorance as a Self-Disciplining Device," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(3), pages 529-544.
    4. Chaloupka, Frank J. & Warner, Kenneth E., 2000. "The economics of smoking," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 29, pages 1539-1627, Elsevier.
    5. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
    6. Becker, Gary S & Murphy, Kevin M, 1988. "A Theory of Rational Addiction," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 675-700, August.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    addiction; self control; negative internalities; habit formation; hyperbolic discounting; naivete; sophistication; time inconsistency;
    All these keywords.

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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