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Strategically Rational Risk Taking By Age In Covid-19, And The Heterogeneous Agent Behavioral Sir Model, Siamak Javadi, Elena Quercioli, Lones Smith
Strategically Rational Risk Taking By Age In Covid-19, And The Heterogeneous Agent Behavioral Sir Model, Siamak Javadi, Elena Quercioli, Lones Smith
Economics and Finance Faculty Publications and Presentations
Given the dramatic age variation in COVID death rates, we create a heterogeneous agent version of the Behavioral SIR contagion model of Engle et al. (2020). The Bayes Nash equilibrium of our infection avoidance game yields a simple new log-linear relationship between the case fatality rate (CFR) and COVID incidence: Everyone knows that everyone optimizes vigilance both for the prevalence and their CFR. We explain 2020 CDC incidence data for the USA north-east in terms of the CFR to age-specific COVID death data for Massachusetts. Our model is statistically significant: A 10% higher CFR reduces incidence by about 1%.