Modeling Trust and Liquidity Under Payment System Stress: A Multi-Agent Approach

TL;DR

This paper develops a multi-agent model to analyze how trust dynamics, behavioral responses, and communication influence liquidity stress and withdrawal peaks in payment systems during operational outages.

Contribution

It introduces a novel multi-agent framework linking trust, customer behavior, and merchant signals to systemic liquidity stress during payment disruptions.

Findings

Withdrawal peaks can occur after the outage nadir during recovery.

Payment substitution reduces peak avoidance but has complex effects on total outflows.

Behavioral hysteresis and delayed outflows are confirmed through simulations.

Abstract

Operational disruptions in retail payments can induce behavioral responses that outlast technical recovery and may amplify liquidity stress. We propose a multi-agent model linking card payment outages to trust dynamics, channel avoidance, and threshold-gated withdrawals. Customers and merchants interact through repeated payment attempts, while customers additionally influence one another on a Watts-Strogatz small-world network. Customers update bounded memory variables capturing accumulated negative experience (scar) and perceived systemic risk (rumor), with merchants contributing persistent broadcast signals that may lag operational recovery. We prove that, under mild conditions on memory persistence and threshold gating, aggregate withdrawal pressure can peak strictly after the outage nadir, including during the recovery phase. Simulations reproduce behavioral hysteresis and confirm delayed peaks of outflows. We further study payment substitution via instant transfer: substitution consistently reduces peak avoidance, yet its effect on cumulative outflows is non-monotonic under realistic merchant broadcast persistence. Robustness experiments across random seeds show stable qualitative behavior. The model highlights why "status green" is not equivalent to risk resolution and motivates incident response strategies that address perception, merchant messaging, and post-recovery communication in addition to technical remediation.