The role of independence in the Green-Lin Diamond-Dybvig model

David Andolfatto (), Ed Nosal and Neil Wallace

No 615, Working Paper from Federal Reserve Bank of Cleveland

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.

Keywords: Equilibrium; (Economics) (search for similar items in EconPapers)
Date: 2006
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Journal Article: The role of independence in the Green-Lin Diamond-Dybvig model (2007)
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