Learning from deregulation: The asymmetric impact of lockdown and reopening on risky behavior during COVID‐19

Edward L. Glaeser, Ginger Z. Jin, Benjamin Leyden and Michael Luca

Journal of Regional Science, 2021, vol. 61, issue 4, 696-709

Abstract: During the coronavirus disease 2019 (COVID‐19) pandemic, states issued and then rescinded stay‐at‐home orders that restricted mobility. We develop a model of learning by deregulation, which predicts that lifting stay‐at‐home orders can signal that going out has become safer. Using restaurant activity data, we find that the implementation of stay‐at‐home orders initially had a limited impact, but that activity rose quickly after states' reopenings. The results suggest that consumers inferred from reopening that it was safer to eat out. The rational, but mistaken inference that occurs in our model may explain why a sharp rise of COVID‐19 cases followed reopening in some states.

Date: 2021
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https://doi.org/10.1111/jors.12539

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Working Paper: Learning from Deregulation: The Asymmetric Impact of Lockdown and Reopening on Risky Behavior During COVID-19 (2020)
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