incorporates both addiction and social interactions and show that, under certain conditions, social interactions reinforce the … effects of addiction. I also show how the dynamics introduced by addiction can solve the pernicious problem of identifying the …

addiction. In contrast to prior research, we allow individuals to make their consumption decisions simultaneous with savings and … labor supply. When addictive goods have a stronger habit formation effect (an addiction effect'), individuals choose to save … less due to the anticipated adverse health consequences of addiction (a detrimental health effect'). This is particularly …

a causal relationship between present and future consumption. This test of addiction is based on the definition of … addiction commonly used in the economics literature. It has two key advantages over previous tests for addiction. First, our …

A standard model of addictive process is Becker and Murphy's rational addiction' model, which has the key empirical … per pack of cigarettes should be at least one dollar higher under our formulation than in the rational addiction case …

We propose an economic theory of addiction based on the premise that cognitive mechanisms such as attention affect … neurosciencee and psychology) concerning the nature of decision-making and addiction. The model is analytically tractable, and it … accounts for a broad range of stylized facts concerning addiction. It also generates a plausible qualitative mapping from the …