Time subordination

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An effective ranking of claims or losses according to a time factor.

For example, the potential losses suffered by depositors during a bank run.

Those who withdraw their deposits first are the least likely to suffer losses.

This is one reason why bank runs can be self-perpetuating once they have started.

From an individual depositor's perspective, it is rational to withdraw a deposit once the run has begun.

(Even if the original reason for the run was not rational.)

See also