RATIONAL CHOICE MODELS

RATIONAL CHOICE MODELS - RATIONAL CHOICE MODELS Becker and...

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RATIONAL CHOICE MODELS Becker and Murphy: Two properties: P1: past consumption lowers the utility gained from a given level of consumption (cf. tolerance) P2: past consumption raises the marginal utility of increased consumption (cf. withdrawal) Given these conditions are met, an agent with a steep discount curve can rationally get themselves into a situation in which they consume something that reduces their average utility below the level they would have had without consuming, and then go on consuming it. (This is the phenomenon that Yaffe describes.) Should this count as addiction? Not obviously. The person doesn’t want to quit; if they stopped consuming they would rationally start again; and in so far as they regret starting, this is just regret that they can no longer get the easy rewards that they got when they first started. (It is analogous to the regret that someone might have that they have spent all of their inheritance, thinking all the while that if they had it again they would spend it in just the same way.) Alternatively, even someone whose discount curve is not so steep can rationally continue to
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RATIONAL CHOICE MODELS - RATIONAL CHOICE MODELS Becker and...

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