A note on convergence of Peck-Shell and Green-Lin mechanisms in the Diamond-Dybvig model

Autor Principal: Cavalcanti, Ricardo
Outros Autores: Bertolai, Jeferson, Monteiro, Paulo Klinger
Tipo: Technical Report
Idioma: en_US
Publicado em: Escola de Pós-Graduação em Economia da FGV 20110727
Link Texto Completo: http://hdl.handle.net/10438/8485
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We study the e¤ects of population size in the Peck-Shell analysis of bank runs.

We nd that a contract featuring equal-treatment for al- most all depositors of the same type approximates the optimum.

Because the approximation also satis es Green-Lin incentive constraints, when the planner discloses positions in the queue, welfare in these alternative spec- i cations are sandwiched.

Disclosure, however, is not needed since our approximating contract is not subject to runs. keywords: bank fragility, role of population size, role of aggregate uncer- tainty