Would depositors pay to show that they do not withdraw? Theory and experiment
Asymmetric information
Bank runs
Experimental evidence
Public information
Issue Date: 
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Kinateder, M. (Markus); Kiss, H.J. (Hubert János); Pintér, Á. (Ágnes). "Would depositors pay to show that they do not withdraw? Theory and experiment". Experimental economics. 23, 2020, 873 - 894
In a Diamond–Dybvig type model of fnancial intermediation, we allow depositors to announce at a positive cost to subsequent depositors that they keep their funds deposited in the bank. Theoretically, the mere availability of public announcements (and not its use) ensures that no bank run is the unique equilibrium outcome. Multiple equilibria—including bank run—exist without such public announcements. We test the theoretical results in the lab and fnd a widespread use of announcements, which we interpret as an attempt to coordinate on the no bank run outcome. Withdrawal rates in general are lower in information sets that contain announcements.

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