A Theory of Rational Addiction

@article{Becker1986ATO,
  title={A Theory of Rational Addiction},
  author={Gary Stanley Becker and Kevin M. Murphy},
  journal={Journal of Political Economy},
  year={1986},
  volume={96},
  pages={675-700}
}
  • Gary Stanley Becker, Kevin M. Murphy
  • Published 1986
  • Economics
  • Journal of Political Economy
  • The authors develop a theory of rational addiction in which rationality means a consistent plan to maximize utility over time. Strong addiction to a good requires a big effect of past consumption of the good on current consumption. Such powerful complementarities cause some steady states to be unstable. They are an important part of the authors' analysis be-cause even small deviations from the consumption at an unstable steady state can lead to large cumulative rises over time in addictive… CONTINUE READING

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