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"there is no demand for the explicit introduction of deliberate randomness into public affairs" On randomness in politics. The Venetian method of selecting a Doge (= President) always impressed me. To overcome the violent partisan politics of early modern Italy, a eight-step method of forming a selection committee was put in place. As I remember three of the steps reduce large groups of say 30 to a smaller one of about 8 via random selection (which would then nominate the next group). Randomization was effectively used to put an end to partisan politics. See Lane, Venice: A Maritime Republic for details.
Toggle Commented Nov 20, 2013 on The responsibility paradox at Stumbling and Mumbling
re: Diamond-Dybvig and the original post The whole value of banks in DD is that they are selling depositors an option to withdraw. Because banks combine this option with socially optimal investment (in the environment without aggregate uncertainty), the existence of the option adds value relative to a cash only economy -- and has the cost of making bank runs possible. So I think what your post does is explain the intuition behind why a fractional reserve banking system is valuable for an economy.
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Jul 26, 2010