Addiction Flashcards
Gine, Karlan & Zinman (2010)
Smokers should engage in commitment devices to increase long term smoking cessation Participants pledge their own $ on passing a urine test, “CARES” Graphic imagery or “cues” ineffective, 3.3% - 5.8% higher probability of passing under CARES
Laibson (2001)
Cue based sensitivities, endogenous cues, costly cue management, Commitment, Impatience spikes Rational Choice + Dynamic Preferences incorporated Cue raises MU of consumption
O’Donoghue & Rabin (2002)
Overattentive to immediate rewards, incorrect beliefs held about our future selves
Bernheim & Rangel (2004)
Addiction models based on 3 parts: i. Addict use is a frequent mistake ii. Addicts experience sensitisation through continual exposure and use iii. Addicts manage their vulnerabilities
Gruber & Koszegi (2001)
Smokers are forward looking but time inconsistent Optimal Taxes should be at least +$1 Evidence for forward looking behaviour, H0: Ct falls due to higher future prices, Ct increases due to hoarding?
Find:
- Consumption increased upon announcement, consistent with hoarding
- Consumption decreased when in came in, consistent with standard micro
Becker & Murphy (1990)
Addiction has two opposing forces:
- i. Tolerance - overall utility falls due to stock consumption, decreased utility from given level of today’s consumption
- ii. Reinforcement - rising utility for given consumption as stock increase, getting more addicted Downward sloping, diverging lines
Becker & Murphy (1988)
Rational addiction model: current utility impacted by
- i. Goods consumed
- ii. Addictive good consumption
- iii. Stock of Past consumption Addictive good and
- higher future prices should dissuade consumption today Negative cross price effect
Issues?
- Present bias: we abondon forward looking plans
- Overconfidence in ability to quit, underpredict cigaretter addictiveness
[Reversed]
Smokers should engage in commitment devices to increase long term smoking cessation Participants pledge their own $ on passing a urine test, “CARES” Graphic imagery or “cues” ineffective, 3.3% - 5.8% higher probability of passing under CARES
Gine, Karlan & Zinman (2010)
[Reversed]
Cue based sensitivities, endogenous cues, costly cue management, Commitment, Impatience spikes Rational Choice + Dynamic Preferences incorporated Cue raises MU of consumption
Laibson (2001)
[Reversed]
Overattentive to immediate rewards, incorrect beliefs held about our future selves
O’Donoghue & Rabin (2002)
[Reversed]
Addiction models based on 3 parts: i. Addict use is a frequent mistake ii. Addicts experience sensitisation through continual exposure and use iii. Addicts manage their vulnerabilities
Bernheim & Rangel (2004)
[Reversed]
Smokers are forward looking but time inconsistent Optimal Taxes should be at least +$1 Evidence for forward looking behaviour, H0: Ct falls due to higher future prices, Ct increases due to hoarding?
Find:
- Consumption increased upon announcement, consistent with hoarding
- Consumption decreased when in came in, consistent with standard micro
Gruber & Koszegi (2001)
[Reversed]
Addiction has two opposing forces:
- i. Tolerance - overall utility falls due to stock consumption, decreased utility from given level of today’s consumption
- ii. Reinforcement - rising utility for given consumption as stock increase, getting more addicted Downward sloping, diverging lines
Becker & Murphy (1990)
[Reversed]
Rational addiction model: current utility impacted by
- i. Goods consumed
- ii. Addictive good consumption
- iii. Stock of Past consumption Addictive good and
- higher future prices should dissuade consumption today Negative cross price effect
Issues?
- Present bias: we abondon forward looking plans
- Overconfidence in ability to quit, underpredict cigaretter addictiveness
Becker & Murphy (1988)
