Humans Against Virus or Humans Against Humans: A Game Theory Approach to the COVID-19 Pandemic

Produced by: 
Banco de la República de Colombia
Available from: 
May 2021
Paper author(s): 
Santiago Forero-Alvarado
Nicolás Moreno-Arias
Juan J. Ospina-Tejeiro
Topic: 
Education - Health
Year: 
2021

Externalities and private information are key characteristics of an epidemic like the Covid-19 pan-demic. We study the welfare costs stemming from the incomplete information environment that these characteristics foster. We develop a framework that embeds a game theory approach into a macro SIR model to analyze the role of information in determining the extent of the health-economy trade-o of a pandemic. We apply the model to the Covid-19 epidemic in the US and find that the costs of keeping health information private are between USD 5:9 trillion and USD 6:7 trillion. We then find an optimal policy of disclosure and divulgation that, combined with testing and containment measures, can improve welfare. Since it is private information about individuals' health what produces the greatest welfare losses, finding ways to make such information known as precisely as possible, would result in significantly fewer deaths and significantly higher economic activity.

ACCESS PAPER

Research section: 
Latest Research
Share this