Beliefs, Competition, and Bank Runs

Within the framework of Diamond-Dybvig (1983), the optimal (run free) outcome is shown to be the unique forward induction equilibrium. In a version of the model that posits Bertrand competition among banks, there are sequential equilibria that imply positive profits. However, the zero-profit contract is supported as the unique equilibrium outcome if the agents' beliefs are restricted to the space of beliefs consistent with the forward induction refinement.

MoreLess

Year of publication:	1995-11-22
Authors:	Temzelides, Ted ; Adao, Bernandino
Institutions:	EconWPA

freely available

Full text |

More access options

Check Google Scholar

In German libraries (KVK)

I need help

More details

Extent:	application/pdf application/postscript
Series:	Finance.
Type of publication:	Book / Working Paper
Notes:	19 pages, TEX(SWP) file 19 pages
Classification:	C7 - Game Theory and Bargaining Theory ; D8 - Information and Uncertainty ; G - Financial Economics
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005561632