Interaction, protection and epidemics
Sanjeev Goyal, Adrien Vigier
Journal of Public Economics Volume 125, May 2015, Pages 64–69
Individuals respond to the risk of contagious infections by restricting interaction and by investing in protection. We develop a model that examines the trade-off between these two actions and the consequences for infection rates. There exists a unique equilibrium: individuals who invest in protection choose to interact more relative to those who do not invest in protection. Changes in the contagiousness of the disease have non-monotonic effects: as a result interaction initially falls and then rises, while infection rates too may initial increase and then decline. We then consider a society with two communities that differ in their returns from interaction — High and Low. Individuals in isolated communities exhibit different behavior: the High community has a higher rate of protection and interaction, and a lower rate of infection. Integration amplifies these differences.