Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/144694
Authors: 
Kinateder, Markus
Kiss, Hubert János
Pintér, Ágnes
Year of Publication: 
2015
Series/Report no.: 
IEHAS Discussion Papers MT-DP - 2015/53
Abstract: 
There is an asymmetry regarding what previous decisions depositors may observe when choosing whether to withdraw or keep the money deposited: it is more likely that withdrawals are observed. We study how decision-making changes if depositors are able to make their decision to keep their funds in the bank visible to subsequent depositors at a cost. We show theoretically in a Diamond-Dybvig setup that without this signaling option multiple equilibria are possible, while signaling makes the no-run outcome the unique equilibrium. We test if the theoretical predicitions hold in a lab experiment. We find that indeed when signaling is available, bank runs are less likely to arise and signaling is extensively used.
Subjects: 
Bank runs
Asymmetric information
Experimental evidence
Signaling
JEL: 
C72
C91
D80
G21
ISBN: 
978-615-5594-20-5
Document Type: 
Working Paper

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