Contagion Management through Information Disclosure

Abstract

We analyze information disclosure as a policy instrument for contagion management in
decentralized environments. A benevolent planner (e.g., the government) tests a fraction of
the population to learn the infection rate. Individuals meet randomly and exert vigilance
effort. Efforts factor in a passage function to reduce the probability of contagion. We analyze the information disclosure policy that maximizes society’s expected welfare. When
efforts are strategic substitutes, we provide, separately, sufficient and necessary conditions
for full disclosure to be optimal. When efforts are strategic complements, the optimal policy features obfuscation. Here, pooling intermediate infection rates is optimal whenever
individuals’ equilibrium effort jumps from no-effort (inaction) to full-effort (frenzy).

Keywords: Contagion, information design, full-disclosure, obfuscation, vigilance effort, passage function, substitutes, complements

JEL Classification: D44, D47, D81, D82