Would a Rational Lucy Take Off without Assessing the Probability of a Crash Landing?

Amnon Levy

Eastern Economic Journal, 2000, vol. 26, issue 4, 431-437

Abstract: A random life expectancy and a positive relationship between the probability of dying and the degree of addiction are incorporated into a rational addiction model. The Becker-Murphy equality between the addictive commodity's full price and marginal utility is modified by discounting the market price and marginal utility of the addictive commodity by the probability of survival. The individual's negative appreciation of the addictive stock is reinforced by the diminishing survival prospects. The rate of change of the consumption of the addictive commodity is lower than that obtained when the effect of addiction on the probability of dying is ignored.

Keywords: Addiction; Individual; Utility (search for similar items in EconPapers)
JEL-codes: D11 I12 (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eej:eeconj:v:26:y:2000:i:4:p:431-437

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