In Vino Veritas: The Economics of Drinking
It is argued that drug consumption, most commonly alcohol drinking, can be a technology to give up some control over one’s actions and words. It can be employed by trustworthy players to reveal their type. Similarly alcohol can function as a “social lubricant” and faciliate type revelation in conversations. It is shown that both separating and pooling equilibria can exist; as opposed to the classic results in the literature, a pooling equilibrium is still informative. Drugs which allow a gradual loss of control by appropriate doses and for which moderate consumption is not addictive are particularly suitable because the consumption can be easily observed and reciprocated and is unlikely to occur out of the social context. There is a tradeoff between the effi ciency gains due to the signaling eff ect and the loss of productivity associated with intoxication. Long run evolutionary equilibria of the type distribution are considered. If coordination on an exclusive technology is effi cient, social norms or laws can raise effi ciency by legalizing only one drug.
|Date of creation:||Dec 2009|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.rwi-essen.de/Email:
More information through EDIRC
|Order Information:||Web: http://www.rwi-essen.de/publikationen/|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Daniel Friedman & Nirvikar Singh, 2002.
CESifo Working Paper Series
766, CESifo Group Munich.
- Tan, Jonathan H. W. & Vogel, Claudia, 2005.
"Religion and trust: an experimental study,"
240, European University Viadrina Frankfurt (Oder), Department of Business Administration and Economics.
- Nick Feltovich & Richmond Harbaugh & Ted To, 2002. "Too Cool for School? Signalling and Countersignalling," RAND Journal of Economics, The RAND Corporation, vol. 33(4), pages 630-649, Winter.
- Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
- Ruffle Bradley J. & Sosis Richard, 2007.
"Does It Pay To Pray? Costly Ritual and Cooperation,"
The B.E. Journal of Economic Analysis & Policy,
De Gruyter, vol. 7(1), pages 1-37, March.
- Bradley Ruffle & Richard Sosis, 2007. "Does it pay to pray? Costly ritual and cooperation," Artefactual Field Experiments 00014, The Field Experiments Website.
- Frank, Robert H, 1987. "If Homo Economicus Could Choose His Own Utility Function, Would He Want One with a Conscience?," American Economic Review, American Economic Association, vol. 77(4), pages 593-604, September.
When requesting a correction, please mention this item's handle: RePEc:rwi:repape:0158. 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: (Sabine Weiler)
If references are entirely missing, you can add them using this form.