Assignment: Decision Making Under Uncertainty
Part I: Pandemic Scenario
Imagine that your group is a decision-making team of civil servants in a department of health. Over the past few months, your medical and public health advisors have been tracking reported cases of an unknown illness at hospitals in your jurisdiction. The illness, respiratory in nature and transmitted by close contact, appears to be caused by an unknown coronavirus strain. They have reached out to the Centers for Disease Control in the U.S. and the World Health Organization to help diagnose the cases. As of today, they report with confidence that there have been at least 50 confirmed cases, with up to 120 more candidates. So far 20 people have died.
The estimated mortality rate of 40% suggests an exceptionally deadly virus, but it is simply too early to conclude anything about mortality. Even if the number of deaths is accurate, the overall infection rate might be much higher than currently known. All of the confirmed cases come from the most populated urban areas, and data are scarce for rural areas that might also be affected. Even confirmed cases in the urban areas may only be the most serious cases. At the present time, there is not enough data to determine whether the worst is already over, or if the cases so far are just the beginning of a serious outbreak.
Some of your advisors are calling for an immediate quarantine that would include shutting down schools, public meeting places, and some forms of public transportation. They argue that the emergency response will save lives and is also likely to prevent the virus from spreading further into other regions, where if unchecked has the potential to take even more lives and cause additional economic damage.
Another group of your advisors disagrees strongly with the emergency response strategy. They suggest that the number of infected individuals si
mply does not justify any aggressive action yet. The outbreak itself has already damaged the economy. The emergency procedures will further reduce economic activity in the area by increasing panic and general disruption. These advisors also point out that the severe lack of information on the virus at this point argues against doing anything drastic immediately. Too little is known about the virus to suffer the expected economic costs of shutting down your jurisdiction, according to them. And the direct costs of the emergency response itself are significant.
To help you make a systematic decision, both groups of advisors have worked together to create a decision tree. Based on the existing data, they think there is a roughly 10% probability that this pandemic threat will turn out to be a serious outbreak and a 90% probability that this will turn out to be a mild outbreak.
Although there is uncertainty about the effectiveness of a quarantine, your advisors project that, if the outbreak is serious, a quarantine would reduce the number of deaths from roughly 600 to roughly 280. There is also uncertainty about the economics impacts of a quarantine as well as of the outbreak itself, but your advisors estimate that the reduction in economic activity caused by the quarantine would add an additional $1.2 billion in costs to the $4.2 billion in costs directly attributable to the outbreak.
For a mild outbreak, doing nothing is expected to result in fewer lost lives 40 versus 60 since shutting down public transportation as part of the quarantine is likely to lead to increased mortality rates for illnesses and accidents unrelated to the pandemic. The predicted economic impact of the quarantine would be the same in a mild outbreak, $1.2 billion, but the direct economic costs of the outbreak would only be $1.2 billion.
This information is summarized in the decision tree below.