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Money and Reciprocity


Hens, Thorsten; Vogt, Bodo (2003). Money and Reciprocity. Working paper series / Institute for Empirical Research in Economics No. 138, University of Zurich.

Abstract

Based on an experimental analysis of a simple monetary economy we argue that a monetarynsystem is more stable than one would expect from individual rationality. We show thatnpositive reciprocity stabilizes the monetary system, provided every participant considers thenfeedbacks of his choice to the stationary equilibrium. If however the participants do not playnstationary strategies and some participants notoriously refuse to accept money then due tonnegative reciprocity their behavior will eventually induce a break down of the monetarynsystem.

Abstract

Based on an experimental analysis of a simple monetary economy we argue that a monetarynsystem is more stable than one would expect from individual rationality. We show thatnpositive reciprocity stabilizes the monetary system, provided every participant considers thenfeedbacks of his choice to the stationary equilibrium. If however the participants do not playnstationary strategies and some participants notoriously refuse to accept money then due tonnegative reciprocity their behavior will eventually induce a break down of the monetarynsystem.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Institute for Empirical Research in Economics (former)
Dewey Decimal Classification:330 Economics
Language:English
Date:November 2003
Deposited On:29 Nov 2011 21:25
Last Modified:12 Aug 2017 12:53
Series Name:Working paper series / Institute for Empirical Research in Economics
ISSN:1424-0459
Official URL:http://www.econ.uzh.ch/wp.html

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