Nash SIR: An Economic-Epidemiological Model of Strategic Behavior During a Viral Epidemic

TL;DR

This paper introduces Nash SIR, a model integrating strategic economic behavior into epidemic dynamics, showing how individual decisions influence epidemic outcomes and how multiple equilibria can be managed.

Contribution

It extends the classic SIR model by incorporating strategic decision-making and equilibrium analysis, allowing for multiple epidemic trajectories influenced by social and economic factors.

Findings

Multiple equilibrium epidemic trajectories exist.

Behavioral decisions can shape epidemic outcomes.

Coordination and interventions can influence epidemic trajectories.

Abstract

This paper develops a Nash-equilibrium extension of the classic SIR model of infectious-disease epidemiology ("Nash SIR"), endogenizing people's decisions whether to engage in economic activity during a viral epidemic and allowing for complementarity in social-economic activity. An equilibrium epidemic is one in which Nash equilibrium behavior during the epidemic generates the epidemic. There may be multiple equilibrium epidemics, in which case the epidemic trajectory can be shaped through the coordination of expectations, in addition to other sorts of interventions such as stay-at-home orders and accelerated vaccine development. An algorithm is provided to compute all equilibrium epidemics.