Santos-Arteaga, Francisco Javier (2010) Bank Runs Without Sunspots. [Working Paper or Technical Report]
Official URL: http://eprints.ucm.es/10444
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.
|Item Type:||Working Paper or Technical Report|
|Uncontrolled Keywords:||Bank Runs, Self-contained Attacks, Bayesian Coordination Games, Revelation Principle, Invisible Hand Principle|
|Subjects:||Social sciences > Economics > Econometrics|
Social sciences > Economics > Stock exchanges
Social sciences > Economics > Banks and credit unions
|Series Name:||Working Papers|
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|Deposited On:||27 Apr 2010 10:30|
|Last Modified:||06 Feb 2014 08:43|
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