Policy-Makers, the International Community and People Living with HIV: The Need for New Commitment Mechanisms

In order to determine the optimal allocation of responsibilities in disease interventions, and in designing commitment mechanisms, the paper develops a three-period game comprising policy- makers, the international community providing financial aid, and individuals. A policy-maker chooses, in period 1, a fraction of funds to be allocated to disease prevention, and the remaining fraction is allocated to disease treatment. The policy-maker chooses additional funds provision in period 2 for disease treatment. The international community chooses funding in period 3 for disease treatment. Persons engage in risky versus safe behavior which may or may not cause disease contraction. When the international community funds, the policy-maker free rides by not funding additionally. We determine which factors impact how the policy-maker allocates funding between disease prevention and treatment. If the policy-maker funds substantially, the international community free rides by funding less. We quantify how more allocation of funds by the policy-maker to disease prevention causes lower disease contraction probability and higher probability that a person remains sick or dies, and how the international community’s funding impacts these two probabilities. We derive seven assertions from the properties of the model. The model is also tested against empirical data on Africa. The results show consistency between the theoretical model and empirical estimates.