We examine the competition among and the opacity of banks subject to rollover
risk. Banks imperfectly compete for uninsured deposits and choose the opacity
of their risky investment. In a static setup, higher bank competition increases
the deposit rate, which increases withdrawal incentives due to strategic complementarity
and thus raises bank fragility. In a dynamic setup with entry, a
theory of bank opacity arises. Opacity trades off a static cost of larger withdrawals
and costly liquidation of investment with a dynamic benefit of deterring
entry and reducing future competition. We use our framework to evaluate the
regulation of competition or transparency. We find that greater competition increases
deposit rates, fragility, and transparency, while minimum transparency
regulation increases both current and future fragility and future competition.
Toni Ahnert David Martinez-Miera
Bank of Canada, CEPR Carlos III, CEPR
Objective of this lecture
To present a model in which agents have cognitive limitations and do not understand the whole picture (the underlying model). Instead they only understand small bits and pieces of the whole model o and use simple rules to guide their behavior. Rationality will be introduced through a selection mechanism in which agents evaluate the performance of the rule they are following and decide to switch or to stick to the rule depending on how well the rule performs relative to other rules.
Paul De Grauwe
September 27, 2019, 9:00 AM to September 28, 2019, 4:30 PM
Van Metre Hall (formerly Founders Hall), Room #126
The Interdisciplinary Center for Economic Science (ICES) at George Mason University will host the second annual conference on Theory and Experiments in Monetary Economics (TEME).
Organized by Daniel Houser and Daniela Puzzello, the TEME conference is sponsored in part by Journal of Economic Behavior & Organization (JEBO), which will also publish a special issue focused on “Theoretical and Experimental Monetary Economics.” In order to encourage the exchange of ideas among participants, the conference will include three keynote addresses and a dozen plenary sessions spread over two days. The purpose of the conference and special issue is to provide a forum to discuss frontier research related to the use of experimental methods in exploring and developing monetary theory and macroeconomic monetary policy.
Uncertainty is an amorphous concept. It reflects uncertainty in the minds of consumers, managers, and policymakers about possible futures. It is also a broad concept, including uncertainty over the path of macro phenomena like GDP growth, micro phenomena like the growth rate of firms, and non economic events like war and climate change. In this essay, I address four questions about uncertainty. First, what are some facts and patterns about economic uncertainty? Both macro and micro uncertainty appear to rise sharply in recessions and fall in booms. Uncertainty also varies heavily across countries—developing countries appear to have about one-third more macro uncertainty than developed countries. Second, why does uncertainty vary during business cycles? Third, do fluctuations in uncertainty affect behavior? Fourth, has higher uncertainty worsened the Great Recession and slowed the recovery? Much of this discussion is based on research on uncertainty from the last five years, reflecting the recent growth of the literature.
Economic Teaching Conference 2019 AgendaOctober 24 - 25, 2019 -- Kansas City
Thursday, October 24, 2019 4:00 - 5:30 PM
5:30 - 6:30 PM Reception
6:30 PM - 8:00 PM Dinner & Keynote: Greg Mankiw-
Ask Greg! Everything You Ever Wanted to Know from Greg Mankiw but Never had the Chance to Ask
8:00 - 9:00 PM Mankiw Meet & Greet with Photos
Friday, October 25, 20198:00 - 9:00 AM Breakfast
9:00 - 9:45 AM Breakout Session 1 (4 concurrent)
9:45 – 10:00 AM Break
10:00 - 10:45 AM Breakout Session 2 (4 concurrent)
10:45 - 11:15 AM Break
11:15 - 12:00 PM Breakout Session 3 (4 concurrent)
12:00 -1:30 PM Lunch & Keynote: Best in Class
1:30 - 2:15 PM Breakout Session 4 (4 concurrent)
2:15 - 2:30 PM Break
2:30 - 3:15 PM Breakout Session 5 (4 concurrent)
3:15 – 3:30 PM Closing Remarks
Wondering what topics might be covered? Here’s a sampling of some of our accepted paper topics for this year’s event:
A prime concern for middle school educators is for students to become knowledgeable and skilled in the areas of economics and personal finance. Some of the reasons underscoring this concern include the questionable future of social support systems, reduction of corporate pension plans, and the lingering effects of the 2008 financial crisis on families who continue to report high debt, tenuous job situations, and reduced savings/investments. This article describes an interactive simulation role-play employed with 5th and 6th-grade students (n = 37). Results reveal that participants’ understanding of key economic concepts and personal finance skills improved using this instructional method.
Nancy B. Sardone
The bubble and burst pattern in asset market experiments is among the most replicable results in experimental economics. Numerous studies have searched for means to reduce this mispricing. Using controlled laboratory experiments, we compare mispricing in standard double auction markets to prices in two clock auctions. The double Dutch auction, shown to be more efficient than the double auction in commodity market experiments, does not eliminate bubbles. However, the English Dutch auction does yield prices reflective of underlying fundamentals and succeeds in taming bubbles even with inexperienced traders in the common declining fundamental value environment.
Following a brief review of the main experimental work into the economics of risk and uncertainty, both static and dynamic, this paper reports the results of an experiment testing one of the key assumptions of the theory of dynamic economic behaviour – that people have a plan and implement it. Using a unique design which enables the plan (if one exists) to be revealed by the first move, the experiment was implemented via the Internet on a subset of the University of Tilburg’s ongoing family expenditure survey panel. The advantages of using such a set of subjects for the experiment are twofold: the demographic characteristics of the set are known and therefore demographic inferences can be made; the representativeness of the set is known and therefore inferences about populations can be made. The results suggest that at least 36% of the subjects had behaviour inconsistent with the hypothesis under test: that people formulate plans and then implement them. Interestingly demographic variables are unable to explain the consistency or inconsistency of individuals. One conclusion is that subjects simply make errors. An alternative conclusion, consistent with previous experimental research, is that people are unable to predict their own future decisions. The implications for dynamic theory (particularly relating to savings and pensions decisions) are important.
John D. Hey
To study coordination in complex social systems such as financial markets, the authors introduce a new prediction market set-up that accounts for fundamental uncertainty. Nonetheless, the market is designed so that its total value is known, and thus its rationality can be evaluated. In two experiments, the authors observe that quick consensus emerges early yielding pronounced mispricing, which however do not show the standard “bubble-and-crash”. The set-up is implemented within the xYotta collaborative platform (https://xyotta.com). xYotta’s functionality offers a large number of extensions of various complexity such as running several parallel markets with the same or different users, as well as collaborative project development in which projects undergo the equivalent of an IPO (initial public offering) and whose subsequent trading matches the role of financial markets in determining value. xYotta is thus offered to researchers as an open source software for the broad investigation of complex systems with human participants.
Ryan O. Murphy
I see Smith and Wilson writing with both the enthusiasm of curious children and the precision of experienced scientists. The book is captivating and well-written. It is accessible both to educated readers and to specialists. It is a must-read for anybody interested in social sciences.
Maria Pia Paganelli
International Conference on Experimental Finance and Advantages ICEFA on August 27-28, 2020 in Sydney, Australia
The International Research Conference Aims and Objectives
The International Research Conference is a federated organization dedicated to bringing together a significant number of diverse scholarly events for presentation within the conference program. Events will run over a span of time during the conference depending on the number and length of the presentations.
ICEFA 2020: International Conference on Experimental Finance and Advantages aims to bring together leading academic scientists, researchers and research scholars to exchange and share their experiences and research results on all aspects of Experimental Finance and Advantages. It also provides a premier interdisciplinary platform for researchers, practitioners and educators to present and discuss the most recent innovations, trends, and concerns as well as practical challenges encountered and solutions adopted in the fields of Experimental Finance and Advantages.
Call for ContributionsProspective authors are kindly encouraged to contribute to and help shape the conference through submissions of their research abstracts, papers and e-posters. Also, high quality research contributions describing original and unpublished results of conceptual, constructive, empirical, experimental, or theoretical work in all areas of Experimental Finance and Advantages are cordially invited for presentation at the conference. The conference solicits contributions of abstracts, papers and e-posters that address themes and topics of the conference, including figures, tables and references of novel research materials.
Conference ProceedingsAll submitted conference papers will be blind peer reviewed by three competent reviewers. The peer-reviewed conference proceedings are indexed in the Open Science Index, Google Scholar, Semantic Scholar, Zenedo, OpenAIRE, BASE, WorldCAT, Sherpa/RoMEO, and other index databases. Impact Factor Indicators.
Interactive Experiments with Mobile Devices
We have found that conducting economic experiments in the classroom, with discussions before, during, and after the experiments, is an effective way of getting students to use economics to think about the world around them. Students have no problem grasping the rules for the experiments and love getting involved with markets and then figuring out what happened rather than simply being lectured at. Better yet, they not always play as cleverly as they might, providing the opportunity to learn from their own and others’ mistakes. They are enthusiastic about what they learn. As instructors, we feel the same way.
JOHANN GRAF LAMBSDORFF