Work detail

Global Games and its Applications in Economics: Creditor Coordination Puzzle

Author: Bc. Tomáš Doležal
Year: 2011 - summer
Leaders: doc. RNDr. Ondřej Kalenda Ph.D., DSc.
Work type: Bachelors
Language: English
Pages: 37
Awards and prizes:
Abstract: This thesis focuses on the creditor coordination problem. The creditor coordination
problem is a problem that arises if there are multiple creditors, which
leads to herd behavior of the creditor and self-fullling prophecies. Theoretical
framework I use for solving this is global games theory, which is a part of noncooperative
game theory. The question I ask is if there is any explanation for
behavior observed in the German banking system, which contradicts previous
results in global games literature. Namely the fact that the size of eect of the
large creditor becomes detrimental for rolling over the debt, if size of the large
creditor exceeds some optimal value. I found that any of the results do not give
conclusive answer to this problem. On top of that, the result I obtained from
my model suggests that the size eect of the large creditor should be even more
positive. Thus I conclude that this behavior can be attributed to quasi-rents
that the large creditor usurps, as was shown in Hubert and Schaefer [2000], as
any supposable setup does not explain this.


Česká Spořitelna


Patria Finance