Strategies for Covid-19: The Option Value of Waiting

Luís Santos-Pinto, José Mata

Publikation: AndetUdgivelser på nettet - Net-publikationFormidling


Increasing and recurring pleas to return to normality in order to avoid the economic costs of a lockdown rely on the idea that ‘natural’ herd immunity may be achieved by letting Covid-19 spread without measures to contain it. This column discusses key uncertainties associated with Covid-19 and argues that there are substantial benefits in keeping the lockdown in place in order to first learn more about Covid-19 and then decide on the best strategy. This logic is based on option theory which shows that when a strategy has irreversible consequences and there are important uncertainties, there is substantial value in waiting.
Publikationsdato22 maj 2020
UdgiverCentre for Economic Policy Research
StatusUdgivet - 22 maj 2020
Udgivet eksterntJa