Sick Season: A Prisoner's Dilemma

My housemate Claire came home the other day with an interesting take on the flu shot. Her boyfriend had told her the previous night that getting the flu vaccine does not actually prevent you from getting the flu. Instead, the flu vaccine keeps you from passing the virus on if you have the unfortunate luck of getting the flu. According to Claire, "If it doesn't actively keep me from getting sick, there's no way that I'm getting a flu shot!" 

Though we usually only discuss the flu shot in Economics when looking for an example of a positive consumption externality, Claire's exclamation at the end of our conversation lends itself perfectly to another economic situation. If everyone shares Claire's opposition to getting a flu shot, we might be in a world of sickly trouble. Let's look at this situation through an economic lense by limiting the world to two people: Person 1 and Person 2. Each person has two options: get a flu shot or do not get a flu shot. If both individuals get a flu shot, neither will get sick because they will not pass the flu on to one another. Both people getting the flu shot is the Pareto optimal outcome. However, in order to optimize his own utility, Person 1 would prefer to not get the flu shot. The costs of getting a flu shot--including money, pain, and time--outweigh the benefit of keeping Person 2 from getting the flu. Additionally, if Person 2 goes and gets a flu shot, Person 1 will not get sick. Therefore, Person 1 has greater utility if he doesn't get his flu shot and Person 2 does. Unfortunately, rational Person 2 is also looking to optimize his utility. If Person 2 went and got the flu shot, his costs would be greater than the benefit of keeping Person 1 from getting sick. Therefore, Person 2 would also prefer to not get the flu shot while Person 1 does. In the end, neither Person 1 nor Person 2 will go to get their flu shot, leaving society as a whole worse off at the dominant strategy equilibrium instead of the Pareto-Efficient equilibrium.

Many solutions to this prisoner's dilemma exist in the real world. For example, it is mandatory for many healthcare professionals to receive the flu vaccine in order to work their jobs. Mandating flu shots shifts the outcome of this prisoner's dilemma from the dominant strategy equilibrium to the Pareto-Efficient equilibrium.