TY  - RPRT
        AU  - Garibaldi, Pietro
AU  - Moen, Espen R.
AU  - Pissarides, Christopher A.
        TI  - Static and Dynamic Inefficiencies in an Optimizing Model of Epidemics
        PY  - 2020/Nov/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 13844
        UR  - https://www.iza.org/index.php/publications/dp13844
        AB  - In an optimizing model of epidemics several externalities arise when agents shield to avoid infection. Optimizing behaviour delays herd immunity but also reduces overall infections to approximately the minimum consistent with herd immunity. For reasonable parameter values, and with no vaccine, we find that agents delay too much because of a "rat race to shield": they shield too much in the hope that others catch the disease and reach herd immunity. This and other externalities drive large wedges between private and social outcomes. The expectation of a vaccine reverses the effects, and agents shield too little.
        KW  - social distancing
KW  - COVID-19
KW  - matching model
KW  - SIR models
KW  - rat race
KW  - herd immunity
        ER  -