Contagion management through information disclosure

Abstract

We analyze information disclosure as a policy instrument for contagion management in decentralized environments. A benevolent planner (e.g., the government) tests a fraction of the population to learn the infection rate. Individuals meet randomly and exert vigilance effort. Efforts factor in a passage function to reduce the probability of contagion. We analyze the information disclosure policy that maximizes society's expected welfare. When efforts are substitutes, we provide necessary conditions and sufficient conditions for full disclosure to be optimal. When efforts are complements, equilibrium effort jumps from no-effort to full-effort as a function of contagion exposure risk. Consequently, a disclosure policy pooling intermediate infection rates—which are associated to high exposure risks—is optimal.