Coase-Sandor Working Paper Series in Law and Economics

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Law & Economics Working Papers


This paper examines the incentives for countries to report disease outbreaks such as swine flu, avian flu and SARS to the international community. Even cursory analysis suggests countries have conflicting incentives regarding whether to report an outbreak. Reporting an outbreak may bring medical assistance, but also trigger trade sanctions to contain an outbreak. Modeling the decision as a signaling game where a country has private but imperfect evidence of an outbreak provides additional insights. First, not all sanctions discourage reporting. Sanctions based on fears of an undetected outbreak (false negatives) encourage disclosure by reducing the relative cost of sanctions that follow a reported outbreak. Second, improving the quality of detection technology may not promote the disclosure of private information about an outbreak because more informative reports could also trigger harsher sanctions. Third, informal surveillance ? an important channel for publicizing outbreaks ? functions as an exogenous, public signal that is less likely to discourage disclosure than better technology. Informal surveillance can counter false positive and false negative formal disclosures, reducing the relative sanctions for disclosing an outbreak.



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