Sequential decisions in the Diamond-Dybvig banking model

  1. Markus Kinateder 1
  2. Hubert János Kiss 2
  1. 1 Universidad de Navarra
    info

    Universidad de Navarra

    Pamplona, España

    ROR https://ror.org/02rxc7m23

  2. 2 Eötvös Loránd University, Budapest, Hungría
Revue:
Working papers = Documentos de trabajo: Serie AD

Année de publication: 2012

Número: 16

Pages: 1-28

Type: Working Paper

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Résumé

We study the Diamond-Dybvig model of financial intermediation (JPE, 1983) under the assumption that depositors have information about previous decisions. Depositors decide sequentially whether to withdraw their funds or continue holding them in the bank. If depositors observe the history of all previous decisions, we show that there are no bank runs in equilibrium independently of whether the realized type vector selected by nature is of perfect or imperfect information.

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