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Beneficial and Harmful Addictions: Two sides of the same coin

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  • Rafael López

    (Universidad Complutense de Madrid)

Abstract

In this paper we obtain an isomorphism between harmful and beneficial addictions in a discrete-time binary choice context. The equivalence thus established allows us to study both phenomena (harmful and beneficial addictions) as two sides of the same coin. Besides the theoretical insight it provides, this dualism is also particularly useful because it readily allows for the translation of the results obtained in the domain of harmful addictions to the domain of beneficial addictions. Once the dualism is established, we analyze addictions under both timeconsistent and time-inconsistent preferences.

Suggested Citation

  • Rafael López, 2016. "Beneficial and Harmful Addictions: Two sides of the same coin," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 84, pages 9-31, Enero - J.
    • Handle: RePEc:lde:journl:y:2016:i:84:p:9-31
    DOI: 10.17533/udea.le.n84a01
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    References listed on IDEAS

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    1. Matthew Rabin & Ted O'Donoghue, 1999. "Doing It Now or Later," American Economic Review, American Economic Association, vol. 89(1), pages 103-124, March.
    2. O'Donoghue, Ted & Rabin, Matthew, 2002. "Addiction and Present-Biased Preferences," Working Papers 02-10, Cornell University, Center for Analytic Economics.
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    5. O'Donoghue, Ted & Rabin, Matthew, 2002. "Addiction and Present-Biased Preferences," Working Papers 02-10, Cornell University, Center for Analytic Economics.
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    More about this item

    Keywords

    addiction; self-control; negative internalities; habit formation; hyperbolic discounting; naïveté; 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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