Political Economy of Crisis Response

Konstantin Sonin, A. Arda Gitmez and Austin L. Wright

No 14778, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We offer a model in which heterogeneous agents make individual decisions with negative external effects such as the extent of social distancing during pandemics. Because of the externality, the agents have different individual and political preferences over the policy response. Personally, they might prefer a low-level response, yet would vote for a higher one because it deters the others - even if simultaneously decreasing their personal benefits. The effect is even more pronounced in information acquisition: agents would want one level of slant in the information they base their actions on and a different level of slant in public announcements. The model accounts for numerous empirical regularities of the public response to COVID-19.

Keywords: Covid-19; Public health externality; Compliance; Bayesian persuasion; Media slant; Income inequality (search for similar items in EconPapers)
JEL-codes: D72 H12 I18 L82 (search for similar items in EconPapers)
Date: 2020-05
New Economics Papers: this item is included in nep-hea and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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