American Economic Review: Vol. 94 No. 5 (December 2004)
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Addiction and Cue-Triggered Decision Processes
Bernheim, B. Douglas, and Antonio Rangel. 2004. "Addiction and Cue-Triggered Decision Processes." American Economic Review, 94(5): 1558-1590.
We propose a model of addiction based on three premises: (i) use among addicts is frequently a mistake; (ii) experience sensitizes an individual to environmental cues that trigger mistaken usage; (iii) addicts understand and manage their susceptibilities. We argue that these premises find support in evidence from psychology, neuroscience, and clinical practice. The model is tractable and generates a plausible mapping between behavior and the characteristics of the user, substance, and environment. It accounts for a number of important patterns associated with addiction, gives rise to a clear welfare standard, and has novel implications for policy.
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Bernheim, B. Douglas