Free and Perfectly Safe but Only Partially Effective Vaccines Can Harm Everyone

26 Pages Posted: 23 Jan 2018 Last revised: 12 May 2020

See all articles by Eduard Talamàs

Eduard Talamàs

IESE Business School

Rakesh Vohra

University of Pennsylvania - Department of Economics

Abstract

Risk compensation can undermine the ability of partially-effective vaccines to curb infectious-disease epidemics: Vaccinated agents may optimally choose to engage in more risky interactions and, as a result, may increase everyone’s infection probability. We show that — in contrast to the prediction of standard models — things can be worse than that: Free and perfectly safe but only partially effective vaccines can reduce everyone’s welfare, and hence fail to satisfy — in a strong sense — the fundamental principle of “first, do no harm.” Our main departure from standard economic epidemiological models is that we allow agents to strategically choose their partners, which we show creates strategic complementarities in risky interactions. As a result, the introduction of a partially-effective vaccine can lead to a much denser interaction structure — whose negative welfare effects overwhelm the beneficial direct welfare effects of this intervention.

Keywords: Epidemics; vaccines; risk compensation; social structure.

JEL Classification: C72, D85, I18

Suggested Citation

Talamàs, Eduard and Vohra, Rakesh, Free and Perfectly Safe but Only Partially Effective Vaccines Can Harm Everyone. PIER Working Paper No. 18-006, Available at SSRN: https://ssrn.com/abstract=3102610 or http://dx.doi.org/10.2139/ssrn.3102610

Eduard Talamàs (Contact Author)

IESE Business School ( email )

Arnús i Garí, 3-7
Barcelona, Philadelphia 08034
Spain

Rakesh Vohra

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States

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