Addiction and Present-Biased Preferences

O'Donoghue, Ted and Matthew Rabin
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Matthew Rabin: U of California, Berkeley

Working Papers from Cornell University, Center for Analytic Economics

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 selfcontrol 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.

JEL-codes: A12 B49 D11 D60 D91 (search for similar items in EconPapers)
Date: 2002-07
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http://www.arts.cornell.edu/econ/CAE/Addicts.pdf

Related works:
Working Paper: Addiction and Present-Biased Preferences (2003)
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Persistent link: http://EconPapers.repec.org/RePEc:ecl:corcae:02-10

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