Equilibrium Social Activity during an Epidemic

Abstract

During an infectious-disease epidemic, people make choices that impact transmission, trading off the risk of infection with the social-economic benefits of activity. In this paper, we investigate how the qualitative features of an epidemic's Nash-equilibrium trajectory depend on the nature of the economic benefits that people get from activity. If such benefits do not depend on how many others are active (``non-social benefits''), as usually modeled, then there is a unique equilibrium trajectory, the epidemic eventually reaches a steady state, and agents born into the steady state have zero lifetime welfare. On the other hand, if the benefit of activity increases as others are more active (``social benefits'') and the disease is sufficiently severe, then there are always multiple equilibrium trajectories, including some that never settle into a steady state and that Pareto dominate any given equilibrium steady state. Moreover, a wider range of diseases can be beneficially eradicated if agents are able to coordinate on an oscillating pattern of collective activity.

Note: Funding: Our work has received no external funding.

Declaration of Interests: There is no competing interest that needs declaration.

Keywords: Equilibrium epidemic, social activity, oscillating behavior, disease eradication, COVID-19

JEL Classification: C73, I12, I18