Abstract
The aim of the present paper is twofold. First, after a brief introduction to the habit formation and addiction to a consumption good we illustrate that consumption may end up in persistent oscillations even within an intertemporal concave utility maximization framework. Thus, persistent “binges” are consistent with rational choice theory. Second, a time-discrete model of habit formation is analysed. We assume that addictive behaviour is damped by a threshold which adapts itself to the habit. Numerical results are presented suggesting that addictive agents behaving accordingly will exhibit chaotic consumption patterns.
This research was partly supported by the Austrian Science Foundation under contract No. P 7783-PHY
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© 1993 Springer-Verlag Berlin · Heidelberg
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Feichtinger, G. (1993). Strange Addictive Behaviour: Periodic and Chaotic Binges. In: Diewert, W.E., Spremann, K., Stehling, F. (eds) Mathematical Modelling in Economics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-78508-5_15
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DOI: https://doi.org/10.1007/978-3-642-78508-5_15
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