Persistent Cyclical Consumption

Franz Wirl and Gustav Feichtinger

Rationality and Society, 1995, vol. 7, issue 2, 156-166

Abstract: This article reconsiders a model of Becker and Murphy on rational addiction. Inter alia, they show that a psychological property of consumption (addiction or habits) can induce complex and, in particular, cyclical behavior (binges). The purpose of this article is to prove that economic reasons (the difference between individual discounting and market rates of interest) can explain rational cycles too.

Date: 1995
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ratsoc:v:7:y:1995:i:2:p:156-166

DOI: 10.1177/1043463195007002004

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