Addiction and Dynamic Inconsistency of Consumption Plans

For pure consumer behavior theory, addiction is an extremely intriguing phenomenon The complexity of the phenomenon of addiction gives rise to numerous approaches to explain it. One of these is the Stigler and Becker model, based on the idea of rational addiction. Rational addiction is a formal analytical tool, but is unable to capture the real process from an economic point of view. In this paper, addiction is conceived as a process that produces intertemporal inconsistency, so it cannot be interpreted in trems of a neoclassical rational behavior. In order to explain the process more realistically, addiction mus be considered as a force producing impulsive acts of consumption. A formalization of this process can be based on the temporary equilibria approach, with equilibria changing in subsequent periods.