@workingpaper {602695, title = {Free and perfectly safe but only partially effective vaccines can harm everyone}, year = {Working Paper}, note = {Draft Date: February 28, 2019}, abstract = {Risk compensation can undermine the ability of partially-effective vaccines to curb infectious-disease epidemics: Vaccinated agents may optimally choose to engage in more risky interactions and, as a result, may increase everyone{\textquoteright}s infection probability. We show how{\textemdash}in contrast to the prediction of standard models{\textemdash}things can be worse than that: Free and perfectly safe but only partially effective vaccines can harm everyone, and hence fail to satisfy{\textemdash}in a strong sense{\textemdash}the fundamental principle of {\textquotedblleft}first, do no harm.{\textquotedblright} Our main departure from standard economic epidemiological models is that we allow agents to strategically choose their partners, which we show creates strategic comple- mentarities in risky interactions. As a result, the introduction of a partially-effective vaccine can lead to a much denser interaction structure{\textemdash}whose negative externalities overwhelm the beneficial direct effects of this intervention.\ }, author = {Eduard Talam{\`a}s and Rakesh Vohra} }