Chaotic consumption patterns in a simple2-D addiction model

Gustav Feichtinger, Cars Hommes and Alexandra Milik
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Alexandra Milik: Institute for Econometrics, Operations Research and System Theory, University of Technology, A-1040 Vienna, AUSTRIA

Economic Theory, 1997, vol. 10, issue 1, 147-173

Abstract: Consumption fluctuations in a simple 2-D addiction model are investigated. The behavioural equations of the model are suggested by a related `rational addiction' model of Becker and Murphy [2]. Our model generates erratic, seemingly unpredictable consumption patterns of the addicted persons. The occurence of chaos is proven by locating a so called horseshoe map in the phase space.

JEL-codes: C60 D11 E32 (search for similar items in EconPapers)
Date: 1997
Note: Received: April 4, 1994; revised version March 25, 1996
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