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Are Vices Substitutes or Complements?

April 26, 2017complements substitutes vices

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Are Vices Substitutes or Complements?

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We develop an empirical model to study the effect of the strength of a vice on consumption levels of other vices and on substitutability of complementarity of vices. We study this problem in three stages: First, we use copulae to study the effect of the strength of a vice on the absolute consumption level and allow for self-selection in the decision to consume the vice on a particular day. Second, we study the effect of strength of the respective vices on the degree of complementarity or substitutability of two vices, again allowing for self-selection. Third, we allow learning in the previous model. We test our model and generate insights using two data sets: (i) the web browsing behavior of 3000 individuals over one year and (ii) pornography websites categorized by strength.