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Traditional models of bank runs do not allow for herding effects, because in these models withdrawal decisions are …'s portfolio, and the withdrawal histories of the other depositors. In some cases, the optimal banking contract permits herding … efficient; these are cases in which the herd is misled. -- Bank runs ; herding ; imperfect information ; perfect Bayesian …
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In his "Simple model of herd behaviour", Banerjee (1992) shows that - in a sequential game - if the first two players have chosen the same action, player 3 and all subsequent players will ignore his/her own information and start a herd, an irreversible one. In this paper we analyse the role...
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Traditional models of bank runs do not allow for herding effects, because in these models withdrawal decisions are …'s portfolio, and the withdrawal histories of the other depositors. In some cases, the optimal banking contract permits herding …
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