Policy makers, the international community and people living with HIV/AIDS: the need for new commitment mechanisms

Abstract

To determine the optimal allocation of responsibilities in disease interventions, and in designing commitment mechanisms, the paper develops a five-period game comprising policy makers, the international community providing financial aid, and nature as expressed by the population. When the international community provides funds, the policy maker free rides by not funding additionally. We determine which factors impact how the policy maker allocates funding between disease prevention and treatment. If the policy maker provides funds substantially, the international community free rides by funding less. We quantify how more allocation of funds by the policy maker to disease prevention causes lower disease contraction probability and higher probability that a person remains sick or dies, and how the international community's funding impacts these two probabilities. We derive seven assertions from the properties of the model and test against empirical African data. The results show consistency between the theoretical model and empirical estimates.