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Understanding Financial Crises: The Contribution of Experimental Economics


  • Frank Heinemann


Several phases of financial crises contain strategic elements than can be directly tested by laboratory experiments. This paper summarizes what we can learn from experiments on the formation of bubbles, on herding behavior, bank runs, and on the effects of providing public information in environments with strategic complementarities. I will put a special emphasis on coordination games that are widely used to model bank runs, government debt crises, and currency crises.

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  • Frank Heinemann, 2012. "Understanding Financial Crises: The Contribution of Experimental Economics," Annals of Economics and Statistics, GENES, issue 107-108, pages 7-29.
  • Handle: RePEc:adr:anecst:y:2012:i:107-108:p:7-29

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    Cited by:

    1. Nobuyuki Hanaki & Nicolas Jacquemet & Stéphane Luchini & Adam Zylbersztejn, 2016. "Cognitive ability and the effect of strategic uncertainty," Theory and Decision, Springer, vol. 81(1), pages 101-121, June.
    2. Juergen Huber & Martin Shubik & Shyam Sunder, 2009. "Default Penalty as a Selection Mechanism among Multiple Equilibria," Cowles Foundation Discussion Papers 1730R, Cowles Foundation for Research in Economics, Yale University, revised Dec 2012.
    3. repec:eee:jeborg:v:145:y:2018:i:c:p:495-510 is not listed on IDEAS

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