Nash SIR: An Economic-Epidemiological Model of Strategic Behavior During a Viral Epidemic

Covid Economics (forthcoming)

20 Pages Posted: 2 Jul 2020

See all articles by David McAdams

David McAdams

Duke University - Fuqua School of Business

Date Written: May 3, 2020

Abstract

This paper develops a Nash-equilibrium extension of the classic SIR model of infectious-disease epidemiology ("Nash SIR"), endogenizing people's decisions whether to engage in economic activity during a viral epidemic and allowing for complementarity in social-economic activity. An equilibrium epidemic is one in which Nash equilibrium behavior during the epidemic generates the epidemic. There may be multiple equilibrium epidemics, in which case the epidemic trajectory can be shaped through the coordination of expectations, in addition to other sorts of interventions such as stay-at-home orders and accelerated vaccine development. An algorithm is provided to compute all equilibrium epidemics.

Note: Funding: None to declare

Declaration of Interest: None to declare

Keywords: Nash SIR, equilibrium epidemic, complementarity, COVID-19

JEL Classification: C73, I18

Suggested Citation

McAdams, David, Nash SIR: An Economic-Epidemiological Model of Strategic Behavior During a Viral Epidemic (May 3, 2020). Covid Economics (forthcoming), Available at SSRN: https://ssrn.com/abstract=3593272 or http://dx.doi.org/10.2139/ssrn.3593272

David McAdams (Contact Author)

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

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