The Prisoner's Dilemma During the COVID-19 Pandemic: A Limited Economic Effect or Lower Mortality?

Introduction

The COVID-19 pandemic has been analyzed in terms of its effects on healthcare systems and the economic growth in countries in many studies. In this study, it is aimed to examine the effects of the pandemic on the public economics in the context of the public finance dilemma. Policy makers have been compelled to choose one of two conflicting situations, a limited economic growth or lower mortality rate, during the COVID-19 pandemic. In many countries, the choice to maintain economic growth has caused a rapid rise in mortality rate during the COVID-19 pandemic. On the other hand, the public policies aimed at protecting the right to health, have succeeded in combating the pandemic with a limited economic growth. However, public policies aimed at one of two contradictory goals, increasing economic growth or decreasing mortality rate, have caused public finance dilemma. Public finance dilemma can be examined in the context of the prisoner’s dilemma game. The prisoner’s dominated strategy in the Prisoner’s Dilemma (PD) is to deny the guilt. The best strategy in PD game is to cooperate on to confessing or denying the guilt. The public policy choice between a limited economic impact and lower mortality, has become a critical issue in many countries. The public finance dilemma tends to be a challenging issue in public economics. The strategies in combating the pandemic, is depended on the economic stimulus packages which countries implement and the health capacity they have. Public finance dilemma has become worsening due to the lack of economic stimulus packages and health system capacities of countries.

In this study, the public policies implemented in some countries during the pandemic will be analyzed. In the first section, the prisoner’s dilemma will be scrutinized regards to public finance theory. The tragedy of commons and alternative solutions to reducing the tragedy of commons will be discussed in this section. In the second section, the pandemic crisis and the countries policy responses to the COVID-19 pandemic will be discussed. The healthcare systems and public policies in selected countries will be analyzed in this section. In the third section, the selected countries will be evaluated as the players in the Prisoner’s dilemma game. The players (countries) have lived through one of four alternative scenarios during the pandemic:

• 1.What happens when the countries with low health system capacity, implement the economic stimulus package efficiently?

• 2.What happens when the countries with sufficient health system capacity, do not implement the economic stimulus package efficiently?

• 3.What happens when the countries with low health system capacity, implement the economic stimulus package efficiently?

• 4.What happens when the countries with low health system capacity, do not implement the economic stimulus package efficiently?

The public policies and health system capacities of the countries should be considered reasons for the public finance dilemma. In the fourth section, the selected countries, Mexico, India, New Zealand, Norway and Cuba, will be analyzed in terms of public policies implementing to reducing the public finance dilemma during the COVID-19 pandemic. In the conclusion section, the public finance dilemma will be discussed in the context of public policies and health care systems capacities of these countries and, will be made suggestions on the public policies.

Basic Concepts In The Prisoner’S Dilemma And Public Finance Theory

The Prisoner’s Dilemma is commonly used to explain the theory of tragedy of commons which examines the danger of extinction the commons because of over-consumption of them. In the Prisoner’s Dilemma game, it is assumed that there are two prisoners choosing their own dominant strategy without communicating each other. According to assumptions of the PD game, prisoners cannot reach to the balance due to their own dominant strategies. A new equilibrium occurs outside of the dominant strategies of both prisoners, it is the third equilibrium reached at the point of equilibrium that resolves the tragedy of commons. Theoretically, the attainment of a Pareto efficiency (optimality) situation depends on the cooperation of two prisoners (Ostrom, 1990, p.5). Typically, the prisoners attempt to reach the point of equilibrium in where they increase their own interests by reducing the common interests (Ergüder& Uymaz, 2014, p.111). From the perspective of public finance theory, the prisoner's dilemma contains many paradoxes. The basic assumption of classical prisoner’s dilemma that the players play a one-time game. It is also assumed that in the prisoner's dilemma game the prisoners would decide to confess or deny the guilt without communicating each other.