Abstract
BackgroundThe article develops an eight-period game between N persons and a pharmaceutical company. The choices of a donor and Nature are parametric.MethodsPersons choose between safe and risky behavior, and whether or not to buy drugs. The pharmaceutical company chooses whether or not to develop drugs. The donor chooses parametrically whether to subsidize drug purchases and drug developments. Nature chooses disease contraction, recovery, death, and virus mutation. The game is solved with backward induction.ResultsThe conditions are specified for each of seven outcomes ranging from safe behavior to risky behavior and buying no or one or both drugs. The seven outcomes distribute themselves across three outcomes for the pharmaceutical company, which are to develop no drugs, develop one drug, and develop two drugs if the virus mutates. For these three outcomes the donor’s expected utility is specified.ConclusionHIV/AIDS data is used to present a procedure for parameter estimation. The players’ strategic choices are exemplified. The article shows how strategic interaction between persons and a pharmaceutical company, with parametric choices of a donor and Nature, impact whether persons choose risky or safe behavior, whether a pharmaceutical company develops no drugs or one drug, or two drugs if a virus mutates, and the impact of subsidies by a donor.
Highlights
The article develops an eight-period game between N persons and a pharmaceutical company
Contribution This article assesses the strategic choices of persons to engage in risky behavior and whether or not to buy drugs, a pharmaceutical company choosing whether to develop expensive drugs to combat disease, and a donor choosing parametrically whether to fund drug development and drug purchases for poor
The model’s scope involves strategic interaction between N persons choosing risky versus safe behavior, a pharmaceutical company choosing whether or not to develop one or two drugs depending on virus mutation, a donor assumed to be parametric, and Nature
Summary
The article develops an eight-period game between N persons and a pharmaceutical company. The choices of a donor and Nature are parametric. Contribution This article assesses the strategic choices of persons to engage in risky behavior and whether or not to buy drugs, a pharmaceutical company choosing whether to develop expensive drugs to combat disease, and a donor choosing parametrically whether to fund drug development and drug purchases for poor. The pharmaceutical company responds by developing or not developing drug 1 which the person buys or not and the donor subsidizes to a certain degree, or does not subsidize. The person responds positively and the virus is contained or it mutates. If it mutates, a drug 2 is or is not developed. Upon consuming or not consuming drug 2, the person recovers or dies
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