Addiction and Present-Biased Preferences

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

Game Theory and Information from EconWPA

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.

JEL-codes: A12 B49 C70 D11 D60 D74 D91 E21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hea and nep-mic
Date: 2003-03-21
Note: 53 pages, Acrobat .pdf
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpga:0303005

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