The Coordination Value of Monetary Exchange: Experimental Evidence

Gabriele Camera and Marco Casari

Purdue University Economics Working Papers from Purdue University, Department of Economics

Abstract: A new behavioral foundation is uncovered for why money promotes impersonal exchange. In an experiment, subjects could cooperate by intertemporally exchanging goods with anonymous opponents met at random. Indefinite repetition supported multiple equilibria, from full defection to the efficient outcome. Introducing the possibility to hold and exchange intrinsically worthless tickets affected outcomes and cooperation patterns. Tickets resembled fiat money, which emerged as a tool for equilibrium selection in the economy. Monetary exchange facilitated coordination on cooperation and redistributed surplus from defectors to cooperators. Treatments where subjects could develop a reputation revealed a limited record-keeping role for monetary exchange.

Keywords: money; cooperation; information; trust; folk theorem; repeated games (search for similar items in EconPapers)
JEL-codes: C70 C90 D80 (search for similar items in EconPapers)
Pages: 45
Date: 2010-08
New Economics Papers: this item is included in nep-cba, nep-cbe, nep-exp, nep-hpe, nep-mon and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: The Coordination Value of Monetary Exchange: Experimental Evidence (2014)
Working Paper: The coordination value of monetary exchange: Experimental evidence (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:pur:prukra:1239

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