Rather Doomed than Uncertain: Risk Attitudes and Transmissive Behavior Under Asymptomatic Infection

Economic Theory, accepted

Matthies, K. and Toxvaerd, F.M.O.

Abstract

We analyze the relation between individuals’ risk aversion and their willingness to expose themselves to infection when faced with an asymptomatic infectious disease. We show that in a high prevalence environment, increasing individuals’ risk aversion increases their propensity to engage in transmissive behavior. The reason for this result is that as risk aversion increases, exposure which leads to infection with certainty becomes relatively more attractive than the uncertain payoffs from protected behavior. We provide evidence from a laboratory experiment which is consistent with our theoretical findings.

Classification JEL
I12
D81