Dilemma: - A Game Theoretic Approach to Addiction

Abstract: Alcoholics Anonymous encourages its members, people who have difficulties to control their alcohol consumption, to refrain from drinking on the basis of “one day at the time”. Meanwhile, we know that one more or one less drink will not determine whether a person becomes addicted. What are the incentives facing this person when he decides on whether to drink one more glass or to remain sober? This thesis models a single decision-maker as represented by an infinite number of agents, each making one independent choice. Addictions, regardless of whether they refer to alcohol, cigarettes, drugs, work, eating, music, television, a certain standard of living or any other action, are considered in terms of tail events. Such an approach to addiction accommodates a number of counterintuitive phenomena and shows that addicts face important decision dilemmas with regard to their consumption. The results call for a distinction between optimizing a single action and maximizing lifetime utility. In order to avoid dilemmas, and especially evade welfare inferior outcomes, some self-imposed rules and outsider interventions are suggested.