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In a nite-trader version of the Diamond and Dybvig (1983) model, the ex-ante efficient allocation is implementable by a direct mechanism (i.e., each trader announces the type of his own ex-post preference) in which truthful revelation is the strictly dominant strategy for each trader. When the model is modified by formalizing the sequential-service constraint (cf. Wallace, 1988), the truth-telling equilibrium implements the symmetric, ex-ante efficient allocation with respect to iterated elimination of strictly dominated strategies.


CPPS Working Paper Series No.92 (4/99)

Recommended Citation

Green, E. J. (1999). Implementing efficient allocations in a model of financial intermediation (CPPS Working Paper Series No.92). Retrieved from Lingnan University website: