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Addiction and Present-Biased Preferences

Author

Listed:
  • Ted O'Donoghue

    (Cornell University)

  • Matthew Rabin

    (University of California, Berkeley)

Abstract

We investigate the role that self-control problems modeled as time-inconsistent, present-biased preferences and a person's awareness of those problems might play in leading people to develop and maintain harmful addictions. Present-biased preferences create a tendency to over-consume addictive products, and awareness of future self-control problems can mitigate or exacerbate this over-consumption, depending on the environment. Our central concern is the welfare consequences of this over-consumption. Our analysis suggests that for realistic environments self-control problems are a plausible source of severely harmful addictions only in conjunction with some unawareness of future self- control problems.

Suggested Citation

  • Ted O'Donoghue & Matthew Rabin, 2003. "Addiction and Present-Biased Preferences," Game Theory and Information 0303005, EconWPA.
  • Handle: RePEc:wpa:wuwpga:0303005 Note: 53 pages, Acrobat .pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Henrekson, Magnus & Dreber, Anna, 2004. "Female Career Success: Institutions, Path Dependence and Psychology," SSE/EFI Working Paper Series in Economics and Finance 574, Stockholm School of Economics, revised 25 Jan 2007.
    2. Berg, Nathan & Kim, Jeong-Yoo, 2010. "Demand for Self Control: A model of Consumer Response to Programs and Products that Moderate Consumption," MPRA Paper 26593, University Library of Munich, Germany.
    3. Vincze, János & Koltay, Gábor, 2009. "Fogyasztói döntések a viselkedési közgazdaságtan szemszögéből
      [Consumer decisions from the angle of behavioural economics]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(6), pages 495-525.
    4. Kan, Kamhon, 2007. "Cigarette smoking and self-control," Journal of Health Economics, Elsevier, vol. 26(1), pages 61-81, January.
    5. Trenton Smith & Young H. Lee, 2006. "Why are Americans Addicted to Baseball? An Empirical Analysis of Fandom in Korea and the U.S," Working Papers 2006-05, School of Economic Sciences, Washington State University.
    6. Sophie Massin, 2011. "La notion d'addiction en économie : La théorie du choix rationnel à l'épreuve," Revue d'économie politique, Dalloz, vol. 121(5), pages 713-750.
    7. Makarov, Uliana, 2011. "Networking or not working: A model of social procrastination from communication," Journal of Economic Behavior & Organization, Elsevier, vol. 80(3), pages 574-585.
    8. Frey, Bruno S. & Benesch, Christine & Stutzer, Alois, 2007. "Does watching TV make us happy?," Journal of Economic Psychology, Elsevier, vol. 28(3), pages 283-313, June.
    9. Ted O'Donoghue & Matthew Rabin, 2001. "Risky Behavior among Youths: Some Issues from Behavioral Economics," NBER Chapters,in: Risky Behavior among Youths: An Economic Analysis, pages 29-68 National Bureau of Economic Research, Inc.
    10. B. Douglas Bernheim & Antonio Rangel, 2002. "Addiction and Cue-Conditioned Cognitive Processes," NBER Working Papers 9329, National Bureau of Economic Research, Inc.
    11. Persichina, Marco, 2016. "Cascading Defections from Cooperation Triggered by Present-Biased Behaviors in the Commons," MPRA Paper 83131, University Library of Munich, Germany, revised 30 Nov 2017.
    12. Ciccarelli, Carlo & Giamboni, Luigi & Waldmann, Robert, 2007. "Cigarette smoking, pregnancy, forward looking behavior and dynamic inconsistency," MPRA Paper 8878, University Library of Munich, Germany.
    13. Xavier Giné & Dean Karlan & Jonathan Zinman, 2010. "Put Your Money Where Your Butt Is: A Commitment Contract for Smoking Cessation," American Economic Journal: Applied Economics, American Economic Association, vol. 2(4), pages 213-235, October.
    14. D.Dragone, 2005. "Incoerenza Dinamica ed Autocontrollo: Proposta per un'Analisi Interdisciplinare," Working Papers 549, Dipartimento Scienze Economiche, Universita' di Bologna.
    15. Teck H. Ho & Noah Lim & Colin Camerer, 2005. "Modeling the Psychology of Consumer and Firm Behavior with Behavioral Economics," Levine's Bibliography 784828000000000476, UCLA Department of Economics.
    16. Smith, Trenton G. & Tasnadi, Attila, 2007. "A theory of natural addiction," Games and Economic Behavior, Elsevier, vol. 59(2), pages 316-344, May.
    17. Grignon, Michel, 2009. "An empirical investigation of heterogeneity in time preferences and smoking behaviors," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(5), pages 739-751, October.
    18. Giovanni Ponti & Ismael Rodríguez Lara & Daniela Di Cagno, 2014. "Doing it now or later with payoff externalities: Experimental evidence on social time preferences," Working Papers. Serie AD 2014-05, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    19. Georgia S. Papoutsi & Andreas C. Drichoutis & Rodolfo M. Nayga Jr., 2013. "The Causes Of Childhood Obesity: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 27(4), pages 743-767, September.
    20. López, Rafael, 2015. "Beneficial and Harmful Addictions: Two sides of the same coin," REVISTA LECTURAS DE ECONOMÍA, UNIVERSIDAD DE ANTIOQUIA - CIE, issue 84, pages 9-31, September.
    21. repec:kap:theord:v:83:y:2017:i:4:d:10.1007_s11238-017-9625-9 is not listed on IDEAS
    22. David (David Patrick) Madden, 2002. "Setting the appropriate tax on cigarettes in Ireland," Working Papers 200225, School of Economics, University College Dublin.
    23. Ryota Nakamura & Marc Suhrcke & Daniel John Zizzo, 2017. "A triple test for behavioral economics models and public health policy," Theory and Decision, Springer, vol. 83(4), pages 513-533, December.

    More about this item

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • B49 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Other
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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