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American Economic Review: Vol. 89 No. 4 (September 1999)
AER Volume. 89, Issue 4 | 
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Emergence of Money as a Medium of Exchange: An Experimental Study
Article Citation
Duffy, John, and
Jack Ochs. 1999. "Emergence of Money as a Medium of Exchange: An Experimental Study."
American Economic Review,
89(4): 847-877.
DOI: 10.1257/aer.89.4.847
DOI: 10.1257/aer.89.4.847
Abstract
This paper reports findings from an experiment that implements a search-theoretic model of money as a medium of exchange. The question examined is whether subjects learn to adopt the same commodities as media of exchange that the model predicts will be used in equilibrium. We report that subjects have a strong tendency to play "fundamental" rather than "speculative" strategies even in environments where speculative strategies yield higher payoffs. We examine some possible motivations for subjects' behavior and conclude that subjects are mainly motivated by past payoff experience as opposed to the marketability considerations that the theory emphasizes.
Article Full-Text Access
Full-text Article
Authors
Duffy, John (U Pittsburgh)
Ochs, Jack (U Pittsburgh)
Ochs, Jack (U Pittsburgh)
JEL Classifications
E40: Money and Interest Rates: General
D83: Search; Learning; Information and Knowledge; Communication; Belief
D83: Search; Learning; Information and Knowledge; Communication; Belief
