Endogenous currency formation in an online environment: The case of Diablo II

Alexander Salter and Solomon Stein ()

The Review of Austrian Economics, 2016, vol. 29, issue 1, 53-66

Abstract: This paper presents a case study of the emergence of currency from a barter economy in an online game community. We use this case study to attempt to shed light on the relative importance of various types of frictions that lead to the emergence of money in search-theoretic models of currency formation. In particular, our study highlights the importance of exchange frictions relative to epistemic frictions. Using the records of an online message board dedicated to facilitating trades within the game, we document the emergence of currency and its stability over time. Copyright Springer Science+Business Media New York 2016

Keywords: Exchange frictions; Epistemic frictions; Kiyotaki-Wright; Medium of exchange; Menger; Money emergence; Online societies; E40; E42; E49 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1007/s11138-014-0289-1

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