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Contagion Management through Information Disclosure

Author

Listed:
  • Jonas Hedlund

    (University of Texas at Dallas)

  • Allan Hernández-Chanto

    (School of Economics, University of Queensland, Brisbane, Australia)

  • Carlos Oyarzún

    (School of Economics, University of Queensland, Brisbane, Australia)

Abstract

We analyze information disclosure as a policy instrument for contagion management in decentralized environments. A benevolent planner (e.g., the government) tests a fraction of the population to learn the infection rate. Individuals meet randomly and exert vigilance effort. Efforts factor in a passage function to probabilistically reduce contagion. We analyze the information disclosure policy that maximizes society’s expected welfare. When efforts are strategic substitutes, we provide sufficient conditions and necessary conditions for full disclosure to be optimal. When efforts are strategic complements, pooling intermediate infection rates is optimal whenever individuals’ equilibrium effort jumps from no-effort (inaction) to full-effort (frenzy).

Suggested Citation

  • Jonas Hedlund & Allan Hernández-Chanto & Carlos Oyarzún, 2021. "Contagion Management through Information Disclosure," Discussion Papers Series 651, School of Economics, University of Queensland, Australia.
    • Handle: RePEc:qld:uq2004:651
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    File URL: http://www.uq.edu.au/economics/abstract/651.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Contagion; information design; full-disclosure; obfuscation; vigilance effort; passage function; substitutes; complements.;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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