Week 4 | The Bank Game (Internally Named)

This is going to be way harder than I expected. 

There’s just so many questions/factors to consider…

1. WHAT EXACTLY ARE MY TREATMENTS??!?!?
2. How Am I Going To Design The Treatments So They Best Reflect SVB?
3. How Many People Am I Including In My Study?
4. Am I Running An Economic Experiment Or Survey?
5. Where Am I Getting Participants If It’s An Economic Experiment?
6. What Are My Incentives For Participation?

There’s more, but these are the most pressing considerations. I think I’m going to tackle them one by one during the next two weeks. You know, 12 weeks seemed like a long time when I first started working on my project, but we’re one-third of the way done already. Time flies.

The Bank Game!

Alright, as I mentioned in my last blog, I’m going to model SVB’s collapse using an economic game. I do not have a name for it yet. Any suggestions are appreciated <3 !!

I’m thinking it’ll be sort of like a reverse public goods game, where players have an initial amount of tokens in a “bank” and they can withdraw any number of tokens within a specific time frame. The tokens kept in the “bank” earn “interest” while those withdrawn can be used in a secondary market to trade. This emulates the clients of SVB, which are primarily business owners, as they can withdraw their money to spend it on any expenses incurred by their business.

Concern 1: Treatment Groups

The scenario listed above would be my control. It reflects the daily operations of a bank and its clients, modeling pre-collapse SVB.

So now my question becomes, what are my other treatment groups? To that, Dr. Wang and I came up with 3 scenarios:

1. An FDIC-Insured Treatment, Meaning Deposits Are Protected Up To A Certain Amount
2. A Government-Protected Treatment, Where All Principal Is Guaranteed
3. A No Protection Treatment, Which Sucks.

I’m not sure if I’ll be adding more treatments. The thing is, each additional treatment group requires an additional sample of participants. I also currently have no idea what other measures SVB could’ve put in place. If I think of an appropriate one though, I’ll add it to this list.

Concern 2: Accurate Modeling 

This is so hard.

I’ve spent this week thinking over the game design and discussing it with my advisors, but we still haven’t finalized it. At first I was thinking that the game has a 100% bank failure component, but then I realized that the risk of leaving money in the bank is way too high and players don’t have an incentive to keep it there. So then we changed it to a scenario where banks have a 10% chance of losing all their money. This expected payoff would then balance with that from interest earnings.

Then the other issue became the time restraint. In order to correctly model a bank withdrawal, the game needs to take place within a specific time frame, such as two minutes for example. Recruiting for participants when multiple people have to be live at the same time is near impossible. There’s just too much time commitment. The easy way would just be to sit in the cafeteria and pull participants into my study (but there’s cons with that approach too). Or I can just conduct an economic survey and ask for what people would do in a hypothetical scenario (but that’s boring).

I should probably figure that out since it ties into concerns 3, 4 and 5! But regardless of what that answer is, I need my game design and instructions finalized, so I’ll be working on that next week.

Current Design 

Honestly, I just need to figure out the design for one treatment, and the other two are simple modifications away. Let’s take the government-protected treatment first. (This is just the first draft of the game!!)

Everyone starts with, let’s say, 100 tokens in the bank. These tokens earn 10% interest if they are kept in the bank for the entire duration of the game, let’s say 2 minutes. Now, if money is withdrawn by 2 or more people, the bank will go bankrupt. Those who withdrew get their principal payment and a certain amount of interest (depending on what time they withdrew). Those who left their money in the bank will lose their interest, but the government will back their principal.

Since each participant only receives one treatment, this will be a between-subject design. 

I’m going to start typing up the instructions this week. I can promise it’ll have to go through multiple rounds of revisions.

Until next time, 

Cindy