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Indirect Reciprocity and Money


Hens, Thorsten; Vogt, Bodo (2010). Indirect Reciprocity and Money. Games and Economic Behavior, 70(2):354-374.

Abstract

Using an experimental analysis of a simple monetary economy as a basis, we argue that a monetary system can be more stable than one would expect from individual rationality. We show that positive reciprocity stabilizes the monetary system, provided every participant considers the feedback of his choice to the stationary equilibrium. If, however, the participants do not play stationary strategies and some participants notoriously refuse to accept money, then due to negative reciprocity their behavior will eventually induce a break-down of the monetary system.

Abstract

Using an experimental analysis of a simple monetary economy as a basis, we argue that a monetary system can be more stable than one would expect from individual rationality. We show that positive reciprocity stabilizes the monetary system, provided every participant considers the feedback of his choice to the stationary equilibrium. If, however, the participants do not play stationary strategies and some participants notoriously refuse to accept money, then due to negative reciprocity their behavior will eventually induce a break-down of the monetary system.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
Date:November 2010
Deposited On:28 Jan 2011 13:37
Last Modified:05 Apr 2016 14:40
Publisher:Elsevier
ISSN:0899-8256
Publisher DOI:https://doi.org/10.1016/j.geb.2010.02.003

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