Money and Reciprocity

Thorsten Hens and Bodo Vogt

No 138, IEW - Working Papers from Institute for Empirical Research in Economics - University of Zurich

Abstract: Based on an experimental analysis of a simple monetary economy we argue that a monetary system is more stable than one would expect from individual rationality. We show that positive reciprocity stabilizes the monetary system, provided every participant considers the feedbacks 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.

Keywords: monetary theory; reciprocity; experiments (search for similar items in EconPapers)
JEL-codes: C73 C91 C92 E40 E41 E42 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mon
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Citations: View citations in EconPapers (1)

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