Sequential decisions in the Diamond-Dybvig banking model
AbstractWe study the Diamond-Dybvig model of financial intermediation (JPE, 1983) under theassumption that depositors have information about previous decisions. Depositors decidesequentially whether to withdraw their funds or continue holding them in the bank. If depositorsobserve the history of all previous decisions, we show that there are no bank runs in equilibriumindependently of whether the realized type vector selected by nature is of perfect or imperfectinformation.JEL classification numbers:
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Bibliographic InfoPaper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2012-16.
Length: 29 pages
Date of creation: Jun 2012
Date of revision:
Publication status: Published by Ivie
Bank Run; Imperfect Information; Perfect Bayesian Equilibrium;
Other versions of this item:
- Markus Kinateder & Hubert Janos Kiss, 2013. "Sequential decisions in the Diamond-Dybvig banking model," IEHAS Discussion Papers 1345, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-07-08 (All new papers)
- NEP-BAN-2012-07-08 (Banking)
- NEP-CBA-2012-07-08 (Central Banking)
- NEP-CTA-2012-07-08 (Contract Theory & Applications)
- NEP-GTH-2012-07-08 (Game Theory)
- NEP-MIC-2012-07-08 (Microeconomics)
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