We introduce habit formation in a model that studies the link between international trade in financial assets, economic growth, and welfare. As with time separable preferences asset trade increases the mean growth rate, but it also increases growth-volatility. We demonstrate that the welfare gain from asset trade is lower with habit persistence in consumption. This reflects that the habit-formi...

The present model outlines the mechanisms underlying habitual control of responding and the ways in which habits interface with goals. Habits emerge from the gradual learning of associations between responses and the features of performance contexts that have historically covaried with them (e.g., physical settings, preceding actions). Once a habit is formed, perception of contexts triggers the...

We formulate an infinite-horizon optimal investment and consumption problem, in which individual forms a habit based on the exponentially weighted average of her past rate, she invests Black--Scholes market. The is constrained to consume at rate higher than certain proportion $\alpha$ habit. Our habit-formation model allows for both addictive ($\alpha=1$) nonaddictive ($0<\alpha<1$) habits. pol...

Representative agent asset pricing models with habit formation preferences do not generate implications for the behavior of individual agents. To explore these implications , I consider a life cycle model of consumption, savings and portfolio allocation for a household with additive and endogenous habit formation preferences. To solve the model, I characterize analytically the boundary of admis...

The coronavirus disease 2019 (COVID-19) continues to claim lives worldwide. We propose that the science of habit formation offers strategies increase adherence COVID-19 prevention behaviors and has potential be lifesaving, particularly for high-risk groups. Eight elements are highlighted here: addressing incorrect beliefs, setting goals, devising an action plan, establishing contextual cues, ad...

OBJECTIVE The purpose of this study was to determine the neural correlates of excessive habit formation in obsessive-compulsive disorder (OCD). The authors aimed to test for neurobiological convergence with the known pathophysiology of OCD and to infer, based on abnormalities in brain activation, whether these habits arise from dysfunction in the goal-directed or habit system. METHOD Thirty-s...