American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Emergence of Money as a Medium of Exchange: An Experimental Study
American Economic Review
vol. 89,
no. 4, September 1999
(pp. 847–877)
Abstract
This paper reports findings from an experiment that implements a search-theoretic model of money as a medium of exchange. The question examined is whether subjects learn to adopt the same commodities as media of exchange that the model predicts will be used in equilibrium. We report that subjects have a strong tendency to play "fundamental" rather than "speculative" strategies even in environments where speculative strategies yield higher payoffs. We examine some possible motivations for subjects' behavior and conclude that subjects are mainly motivated by past payoff experience as opposed to the marketability considerations that the theory emphasizes.Citation
Duffy, John, and Jack Ochs. 1999. "Emergence of Money as a Medium of Exchange: An Experimental Study." American Economic Review, 89 (4): 847–877. DOI: 10.1257/aer.89.4.847JEL Classification
- E40 Money and Interest Rates: General
- D83 Search; Learning; Information and Knowledge; Communication; Belief