A toilet paper run is like a bank run. The economic fixes are about the same

by Alfredo R. Paloyo, University of Wollongong PANIC buying knows no borders. Shoppers in Australia, Japan, Hong Kong and the United States have caugh...

by Alfredo R. Paloyo, University of WollongongShoppers in Australia, Japan, Hong Kong and the United States have caught toilet paper fever on the back of the Covid-19 coronavirus. Shop shelves are being emptied as quickly as they can be stocked.

If every customer simultaneously decided to withdraw all of their deposits, the bank would crumble under the liability.The answer comes from Nobel-winning economist John Nash . Nash shared the Nobel prize in economics for his insights in game theory, notably the existence of what is now called a “Nash equilibrium” in “games”.

But if others panic buy, the optimal strategy for you is to do the same, otherwise you’ll be left without toilet paper. Everyone is facing the same strategies and pay-offs, so others will panic buy if you do.Preventing coordination failureThe fear of everyone else panic buying has made some people panic buy as well. But those who are panic buying are not acting irrationally.

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