The role of independence in the Green-Lin Diamond-Dybvig model |
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Authors: | David Andolfatto |
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Institution: | a Department of Economics, Simon Fraser University, Burnaby, British Columbia, Canada V5A 1S6 b Federal Reserve Bank of Cleveland, P.O. Box 6387, Cleveland, OH 44101-1387, USA c Department of Economics, The Pennsylvania State University, 612 Kern Graduate Building, University Park, PA 16802-3306, USA |
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Abstract: | Green and Lin study a version of the Diamond-Dybvig model with a finite number of agents, independence (independent determination of each agent's type), and sequential service. For special preferences, they show that the ex ante first-best allocation is the unique equilibrium outcome of the model with private information about types. Via a simple argument, it is shown that uniqueness of the truth-telling equilibrium holds for general preferences—and, in particular, for a constrained-efficient allocation whether first-best or not. The crucial assumption is independence. |
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Keywords: | D82 G21 |
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