Teaching Bank Runs with Classroom Experiments
AbstractOnce relegated to cinema or history lectures, bank runs have become a modern phenomenon that captures the interest of students. We use a simple classroom experiment based upon the Diamond-Dybvig Model (1983) to demonstrate how a bank run, a seemingly irrational event, can occur rationally. We then present possible topics for discussion including various ways to prevent bank runs and moral hazard.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 18635.
Date of creation: 12 Jan 2009
Date of revision:
bank runs; multiple equilibria;
Other versions of this item:
- A22 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - Undergraduate
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- 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-2009-11-21 (All new papers)
- NEP-EXP-2009-11-21 (Experimental Economics)
- NEP-MIC-2009-11-21 (Microeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Shy Oz & Stenbacka Rune, 2008. "Rethinking the Roles of Banks: A Call for Narrow Banking," The Economists' Voice, De Gruyter, vol. 5(2), pages 1-4, June.
- Todd R. Kaplan, .
"Why Banks Should Keep Secrets,"
_005, University of Minnesota, Department of Economics.
- Todd R. Kaplan & Dieter Balkenborg, 2010. "Using Economic Classroom Experiments," International Review of Economic Education, Economics Network, University of Bristol, vol. 9(2), pages 99-106.
- Surajeet Chakravarty & Miguel A. Fonseca & Todd Kaplan, 2012. "An Experiment on the Causes of Bank Run Contagions," Discussion Papers 1206, Exeter University, Department of Economics.
- Jonathan E. Alevy & Paul Ronald Johnson, 2013. "A Classroom Financal Market Experiment," Working Papers 2013-01, University of Alaska Anchorage, Department of Economics.
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