Medical capacity investment for epidemic disease: The effects of policymaker's confidence and public trust

Due to the server bed shortage, which has raised ethical dilemmas in the earliest days of the COVID-19 crisis, medical capacity investment has become a vital decision-making issue in the attempt to contain the epidemic. Furthermore, economic strength has failed to explain the significant performance difference across countries in combatting COVID-19. Unlike common diseases, epidemic diseases add substantial unpredictability, complexity, and uncertainty to decision-making. Knowledge miscalibration on epidemiological uncertainties by policymaker's over- and underconfidence can seriously impact policymaking. Ineffective risk communication may lead to conflicting and incoherent information transmission. As a result, public reactions and attitudes could be influenced by policymakers' confidence due to the level of public trust, which eventually affects the degree to which an epidemic spreads. To uncover the impacts of policymakers' confidence and public trust on the medical capacity investment, we establish epidemic diffusion models to characterize how transmission evolves with (and without) vaccination and frame the capacity investment problem as a newsvendor problem. Our results show that if the public fully trusts the public health experts, the policymaker's behavioral bias is always harmful, but its effect on cost increment is marginal. If a policymaker's behavior induces public reactions due to public trust, both the spread of the epidemic and the overall performance will be significantly affected, but such impacts are not always harmful. Decision bias may be beneficial when policymakers are pessimistic or highly overconfident. Having an opportunity to amend initially biased decisions can debias a particular topic but has a limited cost-saving effect.