Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/323283 
Authors: 
Year of Publication: 
2024
Citation: 
[Journal:] Review of Economic Design [ISSN:] 1434-4750 [Volume:] 29 [Issue:] 1 [Publisher:] Springer [Place:] Berlin, Heidelberg [Year:] 2024 [Pages:] 149-189
Publisher: 
Springer, Berlin, Heidelberg
Abstract: 
In an epidemic, the regulation of social distancing and testing is critical for the large group of individuals who are possibly infected, but have not developed clear, distinct symptoms. Each individual’s reaction to a regulation scheme depends on its private probability assessment of being infected. Assuming no monetary transfers, we identify a simple class of schemes for welfare maximization: all individuals who ask for a test are tested with the same probability, independently of their infection probabilities, and the social distancing regulation depends on who asks for a test. Social distancing has a double role: to provide incentives so that the right people get tested, and to curb the spread of the disease. If testing capacities are scarce it can be optimal to test only a randomly selected fraction of those who ask for a test, and require maximal social distancing precisely for those individuals who ask unsuccessfully. If public costs and benefits are small, laissez faire is optimal.
Subjects: 
Infectuous disease
Optimal test allocation
Transfer-free mechanisms
Private health signals
JEL: 
I12
I18
D62
D82
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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