A water pipe to the Greater Boston area has broken. Two million residents have to boil water before they drink it. We were moving apartments so we were a bit slow off the mark. By the time I got to Walgreens this morning, all the water was sold out. Even the San Pellegrino at Whole Foods was gone. The water shortage has all the features of a classic bank run.
Of course everyone needs more bottled water than they usually buy. Who knows when the pipe will be fixed? So, everyone buys extra water for insurance. But then, this increases an individual’s incentive to buy lots of water yet further as there is greater risk of having no water. This is like a classic bank run: the more others’ withdraw money, the more I withdraw money as there may be nothing left for me to withdraw later. Lo and behold bottled water is all gone within hours, just like all the deposits in bank facing a run.
Luckily, there was no beer run. So, I’m safe.