Habit Formation with Threshold Adjustment: Addiction May Imply Complex Dynamics.

A time-discrete descriptive model of habit formation is presented. Addictive behaviour is damped by a threshold which adapts itself to the habit. This simple framework is able to explain periodic, quasi-periodic as well as chaotic consumption patterns of addictive consumers. It turns out that both a high adjustment rate and a steep consumption function favour complex (chaotic) patterns. Coauthors are A. Prskawetz, W. Herold, and P. Zimmer.