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

19 Pages Posted: 23 Jan 2018 Last revised: 4 Mar 2019

See all articles by Eduard Talamàs

Eduard Talamàs

University of Pennsylvania

Rakesh Vohra

University of Pennsylvania - Department of Economics

Date Written: February 27, 2019

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 how—in contrast to the prediction of standard models—things can be worse than that: Free and perfectly safe but only partially effective vaccines can harm everyone, 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 externalities overwhelm the beneficial direct effects of this intervention.

Keywords: Network formation, risk compensation, welfare, strategic complementarities, externalities

JEL Classification: C72, D85, I18

Suggested Citation

Talamàs, Eduard and Vohra, Rakesh, Free and Perfectly Safe but Only Partially Effective Vaccines Can Harm Everyone (February 27, 2019). 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)

University of Pennsylvania ( email )

133 South 36th Street
Philadelphia, PA Philadelphia 19104
United States

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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