Lockdowns as options

Sweder van Wijnbergen

No 21-037/IV, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: I show that the irreversibility of dying coupled with gradual information acquisition over time on the likely arrival and eventual effectiveness of vaccines confers a real option value to lockdown strategies that delay the incidence of a pandemic.The case for lockdown strategies becomes stronger the more likely vaccine discovery is, and the less uncertainty exists about its effectiveness.

Keywords: Pandemic Dynamics; Stochastic Vaccine arrival; information acquisition; irreversibility; lockdowns; real options (search for similar items in EconPapers)
JEL-codes: G12 G13 G18 (search for similar items in EconPapers)
Date: 2021-05-09
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Related works:
Journal Article: Lockdowns as options (2022)
Working Paper: Lockdowns as options (2021)
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