Static and Dynamic Inefficiencies in an Optimizing Model of Epidemics

Pietro Garibaldi, Espen Moen () and Christopher Pissarides

No 13844, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In an optimizing model of epidemics several externalities arise when agents shield to avoid infection. Optimizing behaviour delays herd immunity but also reduces overall infections to approximately the minimum consistent with herd immunity. For reasonable parameter values, and with no vaccine, we find that agents delay too much because of a "rat race to shield": they shield too much in the hope that others catch the disease and reach herd immunity. This and other externalities drive large wedges between private and social outcomes. The expectation of a vaccine reverses the effects, and agents shield too little.

Keywords: social distancing; COVID-19; matching model; SIR models; rat race; herd immunity (search for similar items in EconPapers)
JEL-codes: A12 D61 D62 I10 J18 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2020-11
New Economics Papers: this item is included in nep-dge, nep-hea, nep-mic and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Published - published in: Economic Theory, 2024, 77, 9 - 48

Downloads: (external link)
https://docs.iza.org/dp13844.pdf (application/pdf)

Related works:
Journal Article: Static and dynamic inefficiencies in an optimizing model of epidemics (2024)
Working Paper: Static and dynamic inefficiencies in an optimizing model of epidemics (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp13844

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().