UCLA International Institute

Do domestic institutions influence decisions to participate in IMF programs? I argue that executives facing more veto players are more likely to turn to the IMF, but the IMF is more likely to conclude agreements when there are fewer veto players. Reform-minded executives often use the IMF’s leverage to push through unpopular policies. The more actors in a political system with the veto power to prevent policy change, the more likely an executive will find the IMF useful. Even with the added pressure of the IMF, however, the presence of additional veto players may limit policy change. Such limits are not preferred by the IMF. Thus, as the number of veto players increases, executives are more likely to enter into IMF agreements; the IMF is less likely. To test these arguments, I use a dynamic version of bivariate probit with partial observability.

Economic theories of rational addiction aim to describe consumer behavior in the presence of habit-forming goods. We provide a biological foundation for this body of work by formally specifying conditions under which it is optimal to form a habit. We demonstrate the empirical validity of our thesis with an in-depth review and synthesis of the biomedical literature concerning the action of opiates in the mammalian brain and their effects on behavior. Our results lend credence to many of the unconventional behavioral assumptions employed by theories of rational addiction, including adjacent complementarity and the importance of cues, attention, and self-control in determining the behavior of addicts. Our approach suggests, however, that addiction is “harmful” only when the addict fails to implement the optimal solution. We offer evidence for the special case of the opiates that harmful addiction is the manifestation of a mismatch between behavioral algorithms encoded in the human genome and the expanded menu of choices--generated for example, by advances in drug delivery technology--faced by consumers in the modern world.