Diamond and Dybvig Bank run model
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use the slides to introduce the setting
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Ask if there are questions
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Start with the first vote.
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After a few minutes, stop the voting, show the votes and compute r1 and r2. Show these either on slide or blackboard or similar. Mention either that early or that late withdrawals got a higher return. Make no suggestion on what students should do.
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Second vote with the same scenario.
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After a few minutes, stop the voting and compute r1 and r2. Show them. Compare to first round. Now, could mention that since r2 is larger, all early withdrawals would have been better off waiting and withdrawing late. Since the incentives are to wait, no bankrun occured. (Alternatively, if r1>r2, say late withdrawals would have been better of withdrawing early. This incentive induces a bank run, as now everyone wants to withdraw early before the bank runs out of funds.)
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Use slides to introduce second scenario with different parameters. Mention what changes (larger share of type 1 depositors that always withdraw early).
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Run the third vote. Stop after a few minutes, show r1 and r2. Compare to r1,r2 from early scenario (more or fewer early withdrawals?).
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Run the fourth vote with the same scenario. Compute and show r1,r2. Compare to previous. Again discuss bank run or not (see 6 above).