Rational Disinhibition and Externalities in Prevention

Abstract

This article studies a model of disease propagation in which rational and forward‐looking individuals can control their exposure to infection by engaging in costly preventive behavior. Equilibrium outcomes under decentralized decision making are characterized and contrasted to the outcomes chosen by a social planner. In general, individuals overexpose themselves to infection, leading to suboptimally high disease prevalence. The model is applied to study the welfare effects of preexposure prophylaxis, which reduces transmission between serodiscordant couples and causes disinhibition. It is shown that a decrease in the induced infection risks increases disease prevalence and can lead to decreases in overall welfare.

A cost–benefit analysis of the COVID-19 disease

“… 2 Toxvaerd (2020) for a brief survey of this literature. Among the articles worthy of note are Sethi (1978) , Gersovitz (2010) , Reluga (2010) , Chen et al (2011) , Chen (2012) , Fenichel (2013) , Rowthorn and Toxvaerd (2015) , Toxvaerd (2019) , Toxvaerd and Rowthorn (2020) . …”

Modern Infectious Diseases: Macroeconomic Impacts and Policy Responses

“…12 While we emphasize the macroeconomic linkages and therefore follow Eichenbaum et al (2020a) by explicitly allowing for consumption and labor supply responses to the disease, we acknowledge the large body of literature in economic epidemiology that models the choice of prevention effort, often understood as vaccination but also as social distancing (e.g., Philipson, 1996, 1997;Kremer, 1996;Auld, 2003;Fenichel, 2013;Toxvaerd, 2019Toxvaerd, , 2020. For surveys see Philipson (2000), Gersovitz (2011), and Chen and Toxvaerd (2014).…”

Learning versus habit formation: Optimal timing of lockdown for disease containment

“…Nonetheless even in these fully rational models, the individual decision (i.e. choice of how much to socially distance) is not in general socially optimal as rational agents do not consider the external benefits of social distancing (see Toxvaerd, 2019 ). Hence, imposing lockdowns to reduce human contact can be justified even in such models to reach the social optimum.…”