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

David Andolfatto, Ed Nosal, Neil Wallace

Research output: Contribution to journalArticlepeer-review

33 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)709-715
Number of pages7
JournalJournal of Economic Theory
Volume137
Issue number1
DOIs
StatePublished - Nov 1 2007

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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