The Emergence of Money: Computational Approaches with Fully and Boundedly Rational Agents

Zakaria Babutsidze and Maurizio Iacopetta
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Maurizio Iacopetta: Université Côte d’Azur (GREDEG)

Computational Economics, 2021, vol. 58, issue 1, No 2, 3-26

Abstract: Abstract We discuss the emergence of money in a Kiyotaki and Wright (J Polit Econ 97:927–954, 1989) environment through two computational methodologies. One assumes that agents are fully rational and coordinate on Nash equilibria. The other considers boundedly rational agents whose choices are guided by a classifier system à la Marimon et al. (J Econ Dyn Control 14:329–373, 1990). We apply the two methodologies to study the conditions under which individuals can learn to play speculative strategies—to accept a high-storage-cost good as money. Our analysis suggests that, while in both types of systems money can emerge along a dynamic path, boundedly rational agents make conflicting choices at times, even when the classifier system provides clear information about the likely gains of a trade.

Keywords: Money; Rationality; Speculative strategies; Computational methods (search for similar items in EconPapers)
JEL-codes: C61 C63 D83 E27 E41 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Working Paper: The Emergence of Money: Computational Approaches with Fully and Boundedly Rational Agents (2021)
Working Paper: The Emergence of Money: Computational Approaches with Fully and Boundedly Rational Agents (2021)
Working Paper: The emergence of money: Computational approaches with fully and boundedly rational agents (2019)
Working Paper: The emergence of money: Computational approaches with fully and boundedly rational agents (2019)
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DOI: 10.1007/s10614-019-09887-x

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