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Bad Habits and the Endogenous Timing of Urges

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  • Peter Landry

Abstract

I present a theory of harmful addiction in which “giving in” to an unwanted urge ($i.e.$ consumption) delays the recurrence of urges in the short-run, but increases their long-run frequency. The theory offers new predictions as to how the frequency, levels, cue-dependence, and temporal consistency of consumption evolve during habituation, while uniquely capturing near-term substitution in demand across time. New welfare implications for restrictions on consumption and on marketing are also addressed.

Suggested Citation

  • Peter Landry, 2019. "Bad Habits and the Endogenous Timing of Urges," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(2), pages 785-806.
    • Handle: RePEc:oup:restud:v:86:y:2019:i:2:p:785-806.
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    File URL: http://hdl.handle.net/10.1093/restud/rdx079
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    Cited by:

    1. Qi Ge & Benjamin Ho, 2019. "Energy Use And Temperature Habituation: Evidence From High Frequency Thermostat Usage Data," Economic Inquiry, Western Economic Association International, vol. 57(2), pages 1196-1214, April.
    2. Landry, Peter, 2022. "Pricing, advertising, and endogenous consideration of an “insistent” product," International Journal of Industrial Organization, Elsevier, vol. 80(C).
    3. Gilbert, Ben & Graff Zivin, Joshua S., 2020. "Dynamic corrective taxes with time-varying salience," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).

    More about this item

    Keywords

    Addiction; Habits; Theory; Urges; Cues;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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