Internality

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An internality is a term, introduced in 1993 and used in behavioral economics to describe those types of behaviors that impose costs on a person in the long-run that are not taken into account when making decisions in the present. Classical Economics discourages government from creating legislation that targets internalities, because it is assumed that the consumer takes these personal costs into account when paying for the good that causes the internality. Herrnstein, R., Loewenstein, G., Prelec, D. & Vaughan, W. (1993). Utility maximization and melioration: Internalitites in individual choice. Journal of Behavioral Decision Making, 6, 149-185. http://onlinelibrary.wiley.com/doi/10.1002/bdm.3960060302/abstract