Teaching Bank Runs with Classroom Experiments
Once relegated to cinema or history lectures, bank runs have become a modern phenomenon that captures the interest of students. In this article, the authors explain a simple classroom experiment based on the Diamond-Dybvig model (1983) to demonstrate how a bank run—a seemingly irrational event—can occur rationally. They then present possible topics for discussion including various ways to prevent bank runs and moral hazard.
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Volume (Year): 42 (2011)
Issue (Month): 3 (July)
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- 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.
- Kaplan, T.R., 2000.
"Why Banks Should Keep Secrets,"
0014, Exeter University, Department of Economics.
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