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| Author: | Feichtinger, G. Hommes, C. Milik, A. |
| Title: | Chaotic consumption patterns in a simple 2-D addiction model |
| Journal: | Economic Theory
1997 : JUN, VOL. 10:1, p. 147-173 |
| Index terms: | CONSUMPTION CHAOS INDIVIDUAL BEHAVIOUR MODELS |
| Language: | eng |
| Abstract: | This paper investigates the consumption fluctuations in a simple 2-D addiction model. The consumption patterns of addicted persons can be very erratic and unpredictable. The paper shows the occurrence of topological chaos by locating a chaotic invariant set, in some suitable rectangular region of the phase space. A nonlinear feedback mechanism between the weight and consumption causes the erratic fluctuations. The model is related to the "rational addiction" model by Becker and Murphy in which addicted persons choose consumption according the utility optimization, although no optimization occurs in this model. |
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