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Recurrent Infection and Externalities in Prevention


  • Toxvaerd, Flavio


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.

Suggested Citation

  • Toxvaerd, Flavio, 2010. "Recurrent Infection and Externalities in Prevention," CEPR Discussion Papers 8112, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:8112

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    References listed on IDEAS

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    15. Toxvaerd, Flavio, 2010. "Infection, Acquired Immunity and Externalities in Treatment," CEPR Discussion Papers 8111, C.E.P.R. Discussion Papers.
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    Cited by:

    1. Cerdeiro, Diego A., 2017. "Contagion exposure and protection technology," Games and Economic Behavior, Elsevier, vol. 105(C), pages 230-254.
    2. 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.
    3. Jeremy Greenwood & Philipp Kircher & Cezar Santos & Michèle Tertilt, 2013. "An Equilibrium Model of the African HIV/AIDS Epidemic," NBER Working Papers 18953, National Bureau of Economic Research, Inc.
    4. Rowthorn, Robert & Toxvaerd, Flavio, 2012. "The Optimal Control of Infectious Diseases via Prevention and Treatment," CEPR Discussion Papers 8925, C.E.P.R. Discussion Papers.
    5. Toxvaerd, Flavio, 2010. "Infection, Acquired Immunity and Externalities in Treatment," CEPR Discussion Papers 8111, C.E.P.R. Discussion Papers.
    6. Matthew O. Jackson & Brian W. Rogers & Yves Zenou, 2017. "The Economic Consequences of Social-Network Structure," Journal of Economic Literature, American Economic Association, vol. 55(1), pages 49-95, March.
    7. Galeotti, Andrea & Rogers, Brian W, 2012. "Strategic Immunization and Group Structure," Economics Discussion Papers 9978, University of Essex, Department of Economics.
    8. repec:esx:essedp:707 is not listed on IDEAS
    9. repec:esx:essedp:716 is not listed on IDEAS
    10. Telalagic, S., 2012. "Optimal Treatment of an SIS Disease with Two Strains," Cambridge Working Papers in Economics 1229, Faculty of Economics, University of Cambridge.

    More about this item


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

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health


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