Economic Perspectives on Addiction: Hyperbolic Discounting and Internalities
This paper provides an introduction, with critical interpretations, to the use of hyperbolic discounting as a model of behavior for the consumption of addictive goods. The exponential and hyperbolic discounting models are carefully reviewed, with particular emphasis on the implications for time consistency. We then present a simple explanation of the logic of market failure resulting from internalities and the economic inefficiency that can result when time inconsistent choices have intertemporal impacts. We then briefly review, with commentary, key work from the experimental and broader empirical literature that can be used to assess and critique the hyperbolic discounting model.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
When requesting a correction, please mention this item's handle: RePEc:mve:journl:v:35:y:2009:i:2:p:1-22. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ken Brown)
If references are entirely missing, you can add them using this form.