During the coronavirus disease 2019 (COVID‐19) pandemic, states issued and then rescinded stay‐at‐home orders that restricted mobility. We develop a model of learning by deregulation, which predicts that lifting stay‐at‐home orders can signal that going out has become safer. Using restaurant activity data, we find that the implementation of stay‐at‐home orders initially had a limited impact, but that activity rose quickly after states' reopenings. The results suggest that consumers inferred from reopening that it was safer to eat out. The rational, but mistaken inference that occurs in our model may explain why a sharp rise of COVID‐19 cases followed reopening in some states.

We thank Safegraph and Yelp for providing data. We thank Scott Kominers for helpful comments. Luca has done consulting for tech companies, including Yelp. Leyden was previously employed as an Economics Research Intern at Yelp, but did not receive compensation directly connected to this paper. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. At least one co-author has disclosed a financial relationship of potential relevance for this research. Further information is available online at http://www.nber.org/papers/w27650.ack NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

We investigate the allegation that legacy U.S. airlines communicated via earnings calls to coordinate with other legacy airlines in offering fewer seats on competitive routes. To this end, we first use text analytics to build a novel dataset on communication among airlines about their capacity choices. Estimates from our preferred specification show that the number of offered seats is 2% lower when all legacy airlines in a market discuss the concept of “capacity discipline.” We verify that this reduction materializes only when legacy airlines communicate concurrently, and that it cannot be explained by other possibilities, including that airlines are simply announcing to investors their unilateral plans to reduce capacity, and then following through on those announcements.