Does HIV testing reduce transmission risks in the market for commercial sex?

This paper examines how beliefs about own and partner's HIV status influence willingness to engage in risky sexual behaviour in the market for commercial sex in developing countries. Especially, we look at the e¤ect of one intervention that has the potential to alter beliefs, namely HIV testing, and how testing influences a commercial sex worker's decision to sell unprotected sex. We analyse the hypothesis that HIV testing reduces transmission risks by applying the game theoretical concept of perfect Bayesian equilibrium in a model with double-sided asymmetric information. The information problem is caused by the fact that individuals can only know their own HIV status but not the status of the partner. The main result is that HIV testing of commercial sex workers or their partners does not have an unequivocal bene…cial e¤ect on the HIV epidemic and that supply of risky sex may increase after testing positive - a result that means that testing may have the potential to worsen the epidemic.