Strategic Communications with Socializing Agents Under Unknown Public Health Threats

Abstract. Problem definition: This paper investigates how governments can design optimal public health policies to inform and guide the public amid uncertain health threats. To capture heterogeneity in social behavior, we introduce a class of socializing agents and examine how the government strategically combines two policy instruments—persuasive communication (messages) and physical or monetary penalties—to incentivize compliance with social restrictions. Methodology/results: We develop a game-theoretic model in which the government commits in advance to both messaging and penalty strategies. The optimal policy exhibits a nonmonotonic structure with respect to the pandemic severity, alternating between the use of messages and penalties. Messages are shown to be most effective when the severity of the pandemic is either mild or moderate to high. Interestingly, socializing agents can indirectly promote compliance among traditional agents because of negative externalities, and the government may reduce penalty levels as pandemic severity increases. Managerial implications: Our findings underscore the strategic value of coordinating messages and penalties as complementary tools in public health policy. When the divergence between individual and governmental incentives is small, costless messages—especially those delivering finely granulated information—can effectively influence public behavior. Notably, we identify a dual role for state-contingent penalties not only in enhancing compliance but also in signaling pandemic severity. Overall, by examining the interplay of multiple policy instruments across different dimensions, our results highlight the importance of behavioral heterogeneity and government credibility in shaping public health policies under competing societal objectives. Funding: This work was supported by the National Natural Science Foundation of China [Grants 72501119, 72571122, and 72588101] and the Hong Kong Research Grants Council [Grants C6020-21GF and GRF 16501722]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2024.0936 .