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Beneficial and Harmful Addictions: Two sides of the same coin

Author

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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.
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    4. E. S. Phelps & R. A. Pollak, 1968. "On Second-Best National Saving and Game-Equilibrium Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 35(2), pages 185-199.
    5. Carrillo, Juan D., 2005. "To be consumed with moderation," European Economic Review, Elsevier, vol. 49(1), pages 99-111, January.
    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; 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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