Two office workers discuss the upcoming debate on Keynesian vs. Austrian business cycle theory.
A father talks to his drug using daughter who puts his mind right by explaining the theory of rational addiction.
Theory of rational addiction
Authors:
Becker, Gary S
Murphy, Kevin M
It is a theory 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 consumption or to rapid falls in consumption to abstention. Their theory also impies that "cold turkey" is used to end strong addictions, that addicts often go on binges, that addicts respond more to permanent than to temporary changes in prices of addictive goods, and that anxiety and tensions can precipitate an addiction.
Taking Absurd Theories Seriously:
Economics and the Case of Rational Addiction Theories
Why People Don't Buy Gold
No comments:
Post a Comment