A Complementary Micro Coronavirus Model Under Uncertainty and Utility

James P. Gander

Working Paper Series, Department of Economics, University of Utah from University of Utah, Department of Economics

Abstract: A micro decision-making utility model under uncertainty is presented as a complementary foundation for macro coronavirus models. The micro model consists of two functions, a risk averse utility function depending on wellness and a wellness random output which is a function of the input variable called “treatment” consisting of such elements as social distance, washing hands, wearing a face mask, and others. The decision maker selects a level of treatment that maximizes her/his expected utility, given the probabilities of the respective outputs. The focus is on how changes in a person’s psychological attitude towards the macro determined (announced) probabilities affects the optimum results of the model. Such changes create a micro-macro dynamic interaction which is briefly outlined. A short discussion of the model’s behavioral implications for health policy is also given.

Keywords: Utility; Uncertainty; Risk Averse; Wellness Output; Treatment Inputs; Coronavirus; Psychological Risk Attitude; and Dynamic Interactions. JEL Classification: C02; C61; D11; D20; D81; D84; D91; I1; and I18 (search for similar items in EconPapers)
Pages: 13
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:uta:papers:2020_03

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