skip to content

Faculty of Economics

Journal Cover

Toxvaerd, F.M.O.

Rational Disinhibition and Externalities in Prevention

International Economic Review

Vol. 60 no. 4 pp. 1737-1755 (2019)

Abstract: This paper studies a model of disease propagation in which rational and forward-looking individuals can control their exposure to infection by engaging in costly preventive behavior. Equilibrium outcomes under decentralized decision making are characterized and contrasted to the outcomes chosen by a social planner. In general, individuals over-expose themselves to infection, leading to suboptimally high disease prevalence. The model is applied to study the welfare effects of pre-exposure prophylaxis, which reduces transmission between serodiscordant couples and causes disinhibition. It is shown that a decrease in the induced infection risks increases disease prevalence and can lead to decreases in overall welfare.

Keywords: Economic epidemiology, preventive behavior, disinhibition, immiserization, second-best policies

JEL Codes: C73, I18

Author links: Flavio Toxvaerd  

Publisher's Link:

Papers and Publications

Recent Publications

Ambrus, A. and Elliott, M. Investments in Social Ties, Risk Sharing, and Inequality Review of Economic Studies [2021]

Carvalho, V. M., Nirei, M., Saito, Y. U. and Tahbaz-Salehi, A. Supply Chain Disruptions: Evidence from the Great East Japan Earthquake Quarterly Journal of Economics [2021]

Aidt, T. S., Albornoz, F. and Hauk, E. Foreign Influence and Domestic Policy Journal of Economic Literature [2021]

Cantore, C. and Freund, L. B. Workers, Capitalists, and the Government: Fiscal Policy and Income (Re)Distribution Journal of Monetary Economics [2021]