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Recurrent Infection and Externalities in Prevention

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  • Toxvaerd, Flavio

Abstract

This paper studies a model of disease propagation in which agents can control their exposure to infection by engaging in costly preventive behavior. Agents are assumed to be fully rational, strategically sophisticated and forward-looking. I show that on the transition path, optimal behavior is Markovian, stationary and myopic and there are no contemporaneous externalities. In steady state, in which infection is endemic, there are strategic substitutes. Individuals over-expose themselves to infection, leading to sub-optimally high steady state disease prevalence. Infectivity-reducing measures such as pre-exposure prophylaxis lead to strictly worse steady state levels of disease prevalence. While revealed preferences show that the first-best level of welfare must increase, rational disinhibition, which makes increased exposure to infection a rational response to such measures, may lead to decreased welfare under decentralization.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8112.

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Date of creation: Nov 2010
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Handle: RePEc:cpr:ceprdp:8112

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Related research

Keywords: Economic epidemiology; Preventive behavior; Rational disinhibition; Risk compensation;

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References

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  1. Gersovitz, Mark & Hammer, Jeffrey S., 2001. "The economic control of infectious diseases," Policy Research Working Paper Series 2607, The World Bank.
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  9. Hartl, Richard F., 1987. "A simple proof of the monotonicity of the state trajectories in autonomous control problems," Journal of Economic Theory, Elsevier, vol. 41(1), pages 211-215, February.
  10. Toxvaerd, Flavio, 2010. "Infection, Acquired Immunity and Externalities in Treatment," CEPR Discussion Papers 8111, C.E.P.R. Discussion Papers.
  11. Brito, Dagobert L. & Sheshinski, Eytan & Intriligator, Michael D., 1991. "Externalities and compulsary vaccinations," Journal of Public Economics, Elsevier, vol. 45(1), pages 69-90, June.
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  15. Geoffard, Pierre-Yves & Philipson, Tomas, 1997. "Disease Eradication: Private versus Public Vaccination," American Economic Review, American Economic Association, vol. 87(1), pages 222-30, March.
  16. Francis, P.J. Peter J., 2004. "Optimal tax/subsidy combinations for the flu season," Journal of Economic Dynamics and Control, Elsevier, vol. 28(10), pages 2037-2054, September.
  17. Emily Oster, 2005. "Sexually Transmitted Infections, Sexual Behavior, and the HIV/AIDS Epidemic," The Quarterly Journal of Economics, MIT Press, vol. 120(2), pages 467-515, May.
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Citations

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Cited by:
  1. Andrea Galeotti & Brian W. Rogers, 2013. "Strategic Immunization and Group Structure," American Economic Journal: Microeconomics, American Economic Association, vol. 5(2), pages 1-32, May.
  2. Philipp Kircher & Michele Tertilt & Cezar Santos & Jeremy Greenwood, 2013. "An Equilibrium Model of the African HIV/AIDS Epidemic," 2013 Meeting Papers 195, Society for Economic Dynamics.
  3. Toxvaerd, Flavio, 2010. "Infection, Acquired Immunity and Externalities in Treatment," CEPR Discussion Papers 8111, C.E.P.R. Discussion Papers.
  4. Telalagic, S., 2012. "Optimal Treatment of an SIS Disease with Two Strains," Cambridge Working Papers in Economics 1229, Faculty of Economics, University of Cambridge.

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