We present a theory of rational behavior in which individuals maximize a set of stable preferences over goods with unknown addictive power. The theory is based on three fundamental postulates: that consumption of the addictive good is not equally harmful to all, that individuals possess subjective beliefs concerning this harm, and that beliefs are optimally undated with information gained through consumption. Although individual actions are optimal and dynamically consistent, addicts regret their past consumption decisions and regret their initial assessment of the potential harm of the good. Addict-prone individuals who believe "it could not happen to them" are most likely to be drawn into a harmful addiction.

We present a theory of rational behavior in which individuals maximize a set of stable preferences over goods with unknown addictive power. The theory is based on three fundamental postulates: that consumption of the addictive good is not equally harmful to all, that individuals possess subjective beliefs concerning this harm, and that beliefs are optimally undated with information gained through consumption. Although individual actions are optimal and dynamically consistent, addicts regret their past consumption decisions and regret their initial assessment of the potential harm of the good. Addict-prone individuals who believe "it could not happen to them" are most likely to be drawn into a harmful addiction.

We present a general equilibrium model of conflict to investigate whether the prevalence of democracy is sufficient to foster the perpetual peace hypothesized by Immanuel Kant and whether the world would necessarily become more peaceful as more countries adopt democratic institutions. Our exploration suggests that neither hypothesis is true. The desire of incumbent leaders with unfavorable economic performance to hold on to power generates an incentive to initiate conflict and salvage their position—with some probability. An equilibrium with positive war frequency is sustained even if all nations were to adopt representative democratic institutions and even in the absence of an appropriative motive for war.