Rational Choice with Passion: Virtue in a Model of Rational Addiction

By incorporating a divided self into the rational addiction framework, this paper provides a rationale for and an explicit analysis of two types of budget-shrinking behaviors - actions taken to limit access to lifetime wealth in a given period, and actions taken to change the effective price of the addictive good. Moreover, internal conflict models provide a normative rationale, absent from rational addiction models, for policies that limit access to addictive goods.