introduction: the model, goals.

exemple of liquidity provision (R=2, r1,r2, show that utility increases)

Optimal r2 (so that banks have enough liquidity)
Optimal r1 (maximizing investors' utility)
Very illiquid assets extension (r2>R!)
Bank runs:
Self fulfiling prophecies and equilibria
-- sequential model: observable behavior under perferct/imperfect information-see paper
Policies to avoid runs:
Suspension (if not stopped in time/misforecast of t (not quick enough suspension
(because more than 100 people
causing lower r2 etc., or some people needing liquidity wouldnt have it
at date 1) ->unhappy investors
--Profit fee: under competition (i.e. no monopoly assumption) it would lead f to
zero, unless cooperation/cartel-Government fee --see original paper-Conclusions: bank good provide liquidity, but bank runs?