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Irrational entry, rational exit


Chesney, Marc; Hazari, Bharat (1998). Irrational entry, rational exit. Journal of Mathematical Economics, 29(1):1-13.

Abstract

This paper sets up a model for analysing the problem of rational exit where the stopping time itself is part of the integration problem. The model development is for the case of smoking. Smoking produces pleasure, pain and addiction. Our model captures all these elements and using Brownian notion and continuous martingales establishes that “quit smoking” campaigns require a two pronged attack: educational and medical. It develops a new technique which can be applied to other stopping problems where stopping time itself is part of the integration problem.

Abstract

This paper sets up a model for analysing the problem of rational exit where the stopping time itself is part of the integration problem. The model development is for the case of smoking. Smoking produces pleasure, pain and addiction. Our model captures all these elements and using Brownian notion and continuous martingales establishes that “quit smoking” campaigns require a two pronged attack: educational and medical. It develops a new technique which can be applied to other stopping problems where stopping time itself is part of the integration problem.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
Language:English
Date:1998
Deposited On:03 Jan 2012 17:17
Last Modified:07 Dec 2017 11:02
Publisher:Elsevier
ISSN:0304-4068
Publisher DOI:https://doi.org/10.1016/S0304-4068(97)00010-4
Official URL:http://www.sciencedirect.com/science/article/pii/S0304406897000104
Other Identification Number:merlin-id:4685

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