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A Theoretical and Empirical Study of Addiction


Hung, Angela Ann-Chi (2001) A Theoretical and Empirical Study of Addiction. Dissertation (Ph.D.), California Institute of Technology. doi:10.7907/2tnm-nq10.


Consumption of addictive substances poses a challenge to economic models of rational, forward-looking agents. This dissertation presents a theoretical and empirical examination of consumption of addictive goods.

The theoretical model draws on evidence from psychology and neurobiology to improve on the standard assumptions used in intertemporal consumption studies. I model agents who may misperceive the severity of the future consequences from consuming addictive substances and allow for an agent's environment to shape her preferences in a systematic way suggested by numerous studies that have found craving to be induced by the presence of environmental cues associated with past substance use. The behavior of agents in this behavioral model of addiction can mimic the pattern of quitting and relapsing that is prevalent among addictive substance users.

Chapter 3 presents an empirical analysis of the Becker and Murphy (1988) model of rational addiction using data on grocery store sales of cigarettes. This essay empirically tests the model's predictions concerning consumption responses to future and past price changes as well as the prediction that the response to an anticipated price change differs from the response to an unanticipated price change. In addition, I consider the consumption effects of three institutional changes that occur during the time period 1996 through 1999.

Item Type:Thesis (Dissertation (Ph.D.))
Subject Keywords:Social Sciences
Degree Grantor:California Institute of Technology
Division:Humanities and Social Sciences
Major Option:Social Science
Thesis Availability:Public (worldwide access)
Research Advisor(s):
  • Camerer, Colin F.
Thesis Committee:
  • Camerer, Colin F. (chair)
  • Grether, David M.
  • Jackson, Matthew O.
  • Wilkie, Simon J.
Defense Date:20 February 2001
Record Number:CaltechTHESIS:03252014-094128132
Persistent URL:
Default Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:8165
Deposited On:26 Mar 2014 16:37
Last Modified:24 Aug 2022 23:15

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