Purpose: The purpose of this paper is to analyze how response time in a laboratory experiment on bank runs affects withdrawal decisions. Design/methodology/approach: In the authors’ setup, the bank has no fundamental problems, depositors decide sequentially whether to keep the money in the...

We report experimental evidence on the effect of observability of actions on bank runs. We model depositors’ decision-making in a sequential framework, with three depositors located at the nodes of a network. Depositors observe the other depositors’ actions only if connected by the network....