Bank Runs Without Sunspots
The literature on bank runs reduces all coordination mechanisms triggering attacks on banks to exogenous sunspots. We present a general equilibrium version of these models where the uncertainty faced by depositors is modeled explicitly, such that bank runs arise as optimal equilibrium outcomes corresponding to Bayesian coordination games played by rational agents before depositing. Differentials in information sets between the bank and its depositors lead to rational self-contained equilibrium runs. The coexistence of different beliefs in equilibrium jointly with the self-fulfilling nature of the attacks follow from Adam Smith's invisible hand principle. The runs obtained do not violate the revelation principle.
|Length:||33 pages ISBN Number: 978-84-692-9959-3|
|Date of creation:||2010|
|Date of revision:|
|Contact details of provider:|| Postal: Finca Mas Ferre, Campus de Somosaguas, 28223 Madrid|
Fax: 34 91 394 24 87
Web page: https://www.ucm.es/icei/
More information through EDIRC
|Order Information:|| Postal: Instituto Complutense de Estudios Internacionales. Finca Mas Ferre Campus de Somosaguas 28223 Madrid|
When requesting a correction, please mention this item's handle: RePEc:ucm:wpaper:02-10. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Águeda González Abad)
If references are entirely missing, you can add them using this form.