Seminario 20/09: Alfonso Rosa (UM): Preventing (panic) bank runs.

Información

We  study experimentally how to prevent bank runs using a mechanism inspired in Andolfatto et al. (2017). They propose a mechanism that eliminates bank runs as an equilibrium situation of the deposit contract and implements uniquely the efficient outcome. In our experimental enviroment bank runs may emerge both as a coordination failure in equilibrium and as a panic reaction off equilibrium. The mechanism is able to reduce coordination failures although do not eliminate them. Regarding panic bank runs, the mechanism change the behavior of depositors but do not promote the efficient outcome.