Do Addicts Behave Rationally?

Ernst Fehr and Peter K. Zych

Scandinavian Journal of Economics, 1998, vol. 100, issue 3, 643-661

Abstract: The theory of rational addiction assumes that addicts' behavior is fully rational. Common sense and psychological introspection suggest, however, that addictive behavior is irrational. Without knowledge of the addicts' preferences this dispute cannot be resolved. This paper reports the results of an experiment in which addictive preferences were induced. It turns out that ‘addicts’ consume systematically too much compared to the optimal consumption decision. We explain this systematic excess consumption in terms of the psychologically salient features of addictive goods.

Date: 1998
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