  As the COVID19 spreads across the world, prevention measures are becoming the
essential weapons to combat the pandemic in the period of crisis. The lockdown
measure is the most controversial one as it imposes an overwhelming impact on
our economy and society. Especially when and how to enforce the lockdown
measures are the most challenging questions considering both economic and
epidemiological costs. In this paper, we extend the classic SIR model to find
optimal decision making to balance between economy and people's health during
the outbreak of COVID-19. In our model, we intend to solve a two phases
optimization problem: policymakers control the lockdown rate to maximize the
overall welfare of the society; people in different health statuses take
different decisions on their working hours and consumption to maximize their
utility. We develop a novel method to estimate parameters for the model through
various additional sources of data. We use the Cournot equilibrium to model
people's behavior and also consider the cost of death in order to leverage
between economic and epidemic costs. The analysis of simulation results
provides scientific suggestions for policymakers to make critical decisions on
when to start the lockdown and how strong it should be during the whole period
of the outbreak. Although the model is originally proposed for the COVID19
pandemic, it can be generalized to address similar problems to control the
outbreak of other infectious diseases with lockdown measures.
