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An Analytical Model of Behavior and Policy in an Epidemic

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  • Lukasz Rachel

Abstract

This paper examines the behavior of individuals susceptible to a deadly disease in a tractable equilibrium setting. We analytically characterize individually optimal mitigation behavior and the resulting equilibrium trajectory. Analysis is facilitated by a phase diagram. A key insight is that individually optimal behavior of those susceptible to the disease results in excessive caution. This behavior flattens the epidemic curve and prolongs the epidemic. In contrast, socially optimal behavior results in a higher infection rate, with a focus on minimizing cumulative deaths at minimum cost. The paper offers novel technical contributions and an improved understanding of externalities in econ-epi models.

Suggested Citation

  • Lukasz Rachel, 2026. "An Analytical Model of Behavior and Policy in an Epidemic," American Economic Journal: Macroeconomics, American Economic Association, vol. 18(3), pages 136-173, July.
    • Handle: RePEc:aea:aejmac:v:18:y:2026:i:3:p:136-73
    DOI: 10.1257/mac.20230299
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    More about this item

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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