Born to Run: Adaptive and Strategic Behavior in Experimental Bank-Run Games

34 Pages Posted: 14 Dec 2021 Last revised: 15 Dec 2021

See all articles by Federico Belotti

Federico Belotti

University of Rome Tor Vergata - Department of Economics and Finance; University of Rome, Tor Vergata - Centre for Economics and International Studies (CEIS)

Eloisa Campioni

University of Rome Tor Vergata - Dept. of Economics and Finance

Vittorio Larocca

Luiss Guido Carli University

Francesca Marazzi

CEIS, University of Rome Tor Vergata

Luca Panaccione

University of Rome I - Sapienza University of Rome, Department of Earth Sciences and Forecasting Research Center, Prevention and Control of Geological Risks

Andrea Piano Mortari

Department of Economics and Finance, University of Rome Tor Vergata; CEIS Tor Vergata

Date Written: December 13, 2021

Abstract

We run a laboratory experiment to investigate how the size of the group affects coordination in a bank-run game played repeatedly by participants facing different fellow depositors. For comparability purposes, we keep the coordination tightness constant across different sizes. Participants exhibit an adaptive behavior, since the main drivers of their decisions to withdraw are: previous-round outcomes and own initial choice. Moreover, they mainly adopt the best response to previous-round feedback. However, a sizeable share of participants adopts the opposite mode of behavior, that we refer to as experimentation. The analysis of the determinants of experimentation suggest that subjects adopt this behavior when the probability to lead the group toward the efficient outcome is higher. Finally, our analysis shows that the size of the bank has a significant effect on participants’ decisions, since they withdraw more and experiment less in large banks.

Keywords: Coordination Games, Experimental Studies, Bank Runs.

JEL Classification: C70, C92, D80, G21

Suggested Citation

Belotti, Federico and Campioni, Eloisa and Larocca, Vittorio and Marazzi, Francesca and Panaccione, Luca and Piano Mortari, Andrea, Born to Run: Adaptive and Strategic Behavior in Experimental Bank-Run Games (December 13, 2021). CEIS Working Paper No. 529, Available at SSRN: https://ssrn.com/abstract=3984227 or http://dx.doi.org/10.2139/ssrn.3984227

Federico Belotti

University of Rome Tor Vergata - Department of Economics and Finance

Via Columbia 2
Rome, RM 00133
Italy

University of Rome, Tor Vergata - Centre for Economics and International Studies (CEIS) ( email )

Via Columbia, 2
Rome, RM 00133
Italy

Eloisa Campioni (Contact Author)

University of Rome Tor Vergata - Dept. of Economics and Finance ( email )

Italy

Vittorio Larocca

Luiss Guido Carli University ( email )

Rome
Italy

Francesca Marazzi

CEIS, University of Rome Tor Vergata ( email )

Via Columbia 2
Rome, Lazio 00133
Italy

Luca Panaccione

University of Rome I - Sapienza University of Rome, Department of Earth Sciences and Forecasting Research Center, Prevention and Control of Geological Risks ( email )

Rome
Italy

Andrea Piano Mortari

Department of Economics and Finance, University of Rome Tor Vergata ( email )

Via columbia 2
Rome, Rome 00123
Italy

CEIS Tor Vergata ( email )

via Columbia, 2
Rome, rome 00133
Italy

HOME PAGE: http://www.ceistorvergata.it/area.asp?a=539&oc=817&d=1128

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