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Author Heufer, Jan
Source EconStor
Content type Text
Publisher Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI)
File Format PDF
Language English
Subject Domain (in DDC) Social sciences ♦ Economics
Subject Keyword Asymmetric information ♦ drinking ♦ drug consumption ♦ signaling ♦ social norms ♦ Alkoholkonsum ♦ Asymmetrische Information ♦ Signalling ♦ Soziale Norm ♦ Theorie ♦ Noncooperative Games ♦ Asymmetric and Private Information; Mechanism Design
Abstract It is argued that drug consumption, most commonly alcohol drinking, can be a technology to give up some control over one's actions and words. It can be employed by trustworthy players to reveal their type. Similarly alcohol can function as a social lubricant and faciliate type revelation in conversations. It is shown that both separating and pooling equilibria can exist; as opposed to the classic results in the literature, a pooling equilibrium is still informative. Drugs which allow a gradual loss of control by appropriate doses and for which moderate consumption is not addictive are particularly suitable because the consumption can be easily observed and reciprocated and is unlikely to occur out of the social context. There is a tradeoff between the efficiency gains due to the signaling effect and the loss of productivity associated with intoxication. Long run evolutionary equilibria of the type distribution are considered. If coordination on an exclusive technology is efficient, social norms or laws can raise efficiency by legalizing only one drug.
ISBN 9783867881777
Part of series Ruhr Economic Papers x158
Learning Resource Type Article
Publisher Date 2009-01-01
Publisher Place Essen
Rights Holder