TY  - JOUR
AU  - Bernheim,B. Douglas
AU  - Rangel,Antonio
TI  - Addiction and Cue-Conditioned Cognitive Processes
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9329
PY  - 2002
Y2  - November 2002
UR  - http://www.nber.org/papers/w9329
L1  - http://www.nber.org/papers/w9329.pdf
N1  - Author contact info:
B. Douglas Bernheim
Department of Economics
Stanford University
Stanford, CA 94305-6072
Tel: 650/725-8732
Fax: 650/725-5702
E-Mail: bernheim@stanford.edu

Antonio Rangel
Department of Economics
California Institute of Technology
Pasadena, CA 91125
Tel: (626) 395-4091
E-Mail: rangel@hss.caltech.edu
AB  - We propose an economic theory of addiction based on the premise that cognitive mechanisms such as attention affect behavior independently of preferences.  We argue that the theory is consistent with foundational evidence (e.g. from 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 characteristics of substances into consumption patterns, thereby providing a basis for empirical tests.  Finally, the theory provides a clear standard for evaluating social welfare, and it has a number of striking policy implications.
ER  -