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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. Auld, M. Christopher, 2003. "Choices, beliefs, and infectious disease dynamics," Journal of Health Economics, Elsevier, vol. 22(3), pages 361-377, May.
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  3. Emily Oster, 2007. "HIV and Sexual Behavior Change: Why Not Africa?," NBER Working Papers 13049, National Bureau of Economic Research, Inc.
  4. Toxvaerd, Flavio, 2010. "Infection, Acquired Immunity and Externalities in Treatment," CEPR Discussion Papers 8111, C.E.P.R. Discussion Papers.
  5. 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.
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  8. 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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  12. Steven M. Goldman and James Lightwood., 1996. "Cost Optimization in the SIS Model of Infectious Disease with Treatment," Economics Working Papers 96-245, University of California at Berkeley.
  13. 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.
  14. Scott Barrett, 2003. "Global Disease Eradication," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 591-600, 04/05.
  15. 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.
  16. Francis, Peter J., 1997. "Dynamic epidemiology and the market for vaccinations," Journal of Public Economics, Elsevier, vol. 63(3), pages 383-406, February.
  17. 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.
  18. Kremer, Michael, 1996. "Integrating Behavioral Choice into Epidemiological Models of AIDS," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 549-73, May.
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Cited by:
  1. Toxvaerd, Flavio, 2010. "Infection, Acquired Immunity and Externalities in Treatment," CEPR Discussion Papers 8111, C.E.P.R. Discussion Papers.
  2. Andrea Galeotti & Brian W. Rogers, 2012. "Strategic Immunization and Group Structure," Economics Discussion Papers 716, University of Essex, Department of Economics.
  3. Jeremy Greenwood & Philipp Kircher & Cezar Santos & Michele Tertilt, 2013. "An Equilibrium Model of the African HIV/AIDS Epidemic," Economie d'Avant Garde Research Reports 20, Economie d'Avant Garde.
  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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