CFDP 1869

Runs, Panics and Bubbles: Diamond-Dybvig and Morris-Shin Reconsidered

Publication Date: August 2012

Pages: 28

Abstract: 

The basic two-noncooperative-equilibrium-point model of Diamond and Dybvig is considered along with the work of Morris and Shin utilizing the possibility of outside noise to select a unique equilibrium point. Both of these approaches are essentially nondynamic. We add an explicit replicator dynamic from evolutionary game theory to provide for a sensitivity analysis that encompasses both models and contains the results of both depending on parameter settings.

Keywords: 

Multiple equilibria, Runs, Replicator dynamics, Sensitivity analysis

JEL Classification Codes: C73, D84, E59

See CFP: 1447