Since the turn of the century, legislation in Western countries has expanded rapidly to reverse the brief dominance of laissez faire during the nineteenth century. The state no longer merely protects against violations of person and property through murder, rape, or burglary but also restricts "discrimination" against certain minorities, collusive business arrangements, "jaywalking," travel, the materials used in construction, and thousands of other activities. The activities restricted not only are numerous but also range widely, affecting persons in very different pursuits and of diverse social backgrounds, education levels, ages, races, etc. Moreover, the likelihood that an offender will be discovered and con-I would like to thank the Lilly Endowment for financing a very productive summer in 1965 at the University of California at Los Angeles. While there I received very helpful comments on an earlier draft from, among others,

Press, 1963). In his well-known earlier study Mincer considered the allocation of married women between " housework " and labour force participation. (See his " Labor Force Participation of Married Women," in Aspects of Labor Economics (Princeton University Press, 1962).

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We develop a theory of rational addiction in which rationality means a consistent plan to maximize utility over time. Strong addiction to a good requires a big effect of past consumption of the good on current consumption. Such powerful complementarities cause some steady states to be unstable. They are an important part of our analysis because even small deviations from the consumption at an unstable steady state can lead to large cumulative rises over time in addictive consumption or to rapid falls in consumption to abstention. Our theory also implies that "cold turkey" is used to end strong addictions, that addicts often go on binges, that addicts respond more to permanent than to temporary changes in prices of addictive goods, and that anxiety and tensions can precipitate an addiction. Use doth breed a habit. [WILLIAM The Two SHAKESPEARE,