Equilibrium Social Activity during an Epidemic

43 Pages Posted: 27 Jul 2021

See all articles by David McAdams

David McAdams

Duke University - Fuqua School of Business

Yangbo Song

School of Management and Economics, CUHK (SZ)

Dihan Zou

University of North Carolina (UNC) at Chapel Hill

Date Written: July 1, 2021

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

Suggested Citation

McAdams, David and Song, Yangbo and Zou, Dihan, Equilibrium Social Activity during an Epidemic (July 1, 2021). Available at SSRN: https://ssrn.com/abstract=3878073 or http://dx.doi.org/10.2139/ssrn.3878073

David McAdams

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

Yangbo Song (Contact Author)

School of Management and Economics, CUHK (SZ) ( email )

Dihan Zou

University of North Carolina (UNC) at Chapel Hill ( email )

102 Ridge Road
Chapel Hill, NC NC 27514
United States

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