Political Economy of Crisis Response

A. Arda Gitmez, Konstantin Sonin and Austin Wright ()
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Austin Wright: University of Chicago - Harris School of Public Policy

No 2020-68, Working Papers from Becker Friedman Institute for Research In Economics

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; Bayesian persuasion; compliance; media slant; income inequality (search for similar items in EconPapers)
JEL-codes: D72 H12 I18 L82 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2020
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Citations: View citations in EconPapers (13)

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