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A theory of natural addiction

  • Smith, Trenton G.
  • Tasnadi, Attila

Economic theories of rational addiction aim to describe consumer behavior in the presence of habit-forming goods. We provide a biological foundation for this body of work by formally specifying conditions under which it is optimal to form a habit. We demonstrate the empirical validity of our thesis with an in-depth review and synthesis of the biomedical literature concerning the action of opiates in the mammalian brain and their e ects on behavior. Our results lend credence to many of the unconventional behavioral assumptions employed by theories of rational addiction, including adjacent complementarity and the importance of cues, attention, and self-control in determining the behavior of addicts. Our approach suggests, however, that addiction is 'harmful' only when the addict fails to implement the optimal solution. We offer evidence for the special case of the opiates that harmful addiction is the manifestation of a mismatch between behavioral algorithms encoded in the human genome and the expanded menu of choices- -generated for example, by advances in drug delivery technology--faced by consumers in the modern world.

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Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 59 (2007)
Issue (Month): 2 (May)
Pages: 316-344

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Handle: RePEc:eee:gamebe:v:59:y:2007:i:2:p:316-344
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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  3. Bergstrom, T., 1995. "Economics of a Family Way," Papers 95-07, Michigan - Center for Research on Economic & Social Theory.
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  17. Hirshleifer, Jack, 1977. "Economics from a Biological Viewpoint," Journal of Law and Economics, University of Chicago Press, vol. 20(1), pages 1-52, April.
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  19. Laibson, David I., 2000. "A Cue-Theory of Consumption," Scholarly Articles 4481496, Harvard University Department of Economics.
  20. Ted Bergstrom, 1995. "Economic in a Family Way," Papers _028, University of Michigan, Department of Economics.
  21. Jonathan Gruber & Botond Köszegi, 2001. "Is Addiction "Rational"? Theory And Evidence," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1261-1303, November.
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  25. Ainslie, George, 1991. "Derivation of "Rational" Economic Behavior from Hyperbolic Discount Curves," American Economic Review, American Economic Association, vol. 81(2), pages 334-40, May.
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