Given the dramatic age variation in COVID death rates, we create a heterogeneous agent version of the Behavioral SIR contagion model of Engle et al. (2020). The Bayes Nash equilibrium of our infection avoidance game yields a simple new log-linear relationship between the case fatality rate (CFR) and COVID incidence: Everyone knows that everyone optimizes vigilance both for the prevalence and their CFR. We explain 2020 CDC incidence data for the USA north-east in terms of the CFR to age-specific COVID death data for Massachusetts. Our model is statistically significant: A 10% higher CFR reduces incidence by about 1%.
Javadi, Siamak and Quercioli, Elena and Smith, Lones, Strategically Rational Risk Taking by Age in COVID-19, and the Heterogeneous Agent Behavioral SIR Model (February 28, 2021). Available at SSRN: https://ssrn.com/abstract=3794840 or http://dx.doi.org/10.2139/ssrn.3794840