Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/244344
Authors: 
Alfaro, Laura
Faia, Ester
Lamersdorf, Nora
Saidi, Farzad
Year of Publication: 
2021
Series/Report no.: 
ECONtribute Discussion Paper No. 110
Publisher: 
University of Bonn and University of Cologne, Reinhard Selten Institute (RSI), Bonn and Cologne
Abstract: 
Externalities and social preferences, such as patience and altruism, play a key role in the endogenous choice of social interactions, which in turn affect the diffusion of a pandemic or patterns of social segregation. We build a dynamic model, augmented with an SIR block, in which agents optimally choose the intensity of both general and group-specific social interactions. The equilibria in the baseline and the SIR-network model result from a matching process governed by optimally chosen contact rates. Taking into account agents' endogenous behavior generates markedly different predictions relative to a na¸ve SIR model. Through a planner's problem, we show that neglecting agents' response to risk leads to misguided policy decisions. Mobility restrictions beyond agents' restraint are needed to the extent that aggregate externalities are not curtailed by social preferences.
Subjects: 
social interactions
pandemics
SIR network models
social preferences
social planner
targeted policies
JEL: 
D62
D64
D85
D91
E70
I10
I18
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.