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Institutional Affiliation: RAND
NBER Working Papers and Publications
|October 2013||Conforming and Non-conforming Peer Effects in Vaccination Decisions|
with Elizabeth Bodine-Baron, Raffaello Varadavas, Neeraj Sood: w19528
Traditional economic models of vaccination assume that agents free-ride on the vaccination decision of others. These models show that private vaccination rates are always below the social optimal and even large subsidies cannot achieve disease eradication. In this paper, we build a model where in addition to the desire to free-ride, agents have a desire to conform to the vaccination decisions of their peers. In this model privately optimal vaccination rates can be higher or lower than the social optimal and thus subsidies for vaccination are not always optimal. However, in certain cases, even small subsidies can achieve disease eradication.