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On the monetary exchange with multiple equilibrium money holdings distributions: An experimental approach

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  • Kamiya, Kazuya
  • Kobayashi, Hajime
  • Shichijo, Tatsuhiro
  • Shimizu, Takashi

Abstract

In this study, we investigate a search model with divisible fiat money in a laboratory setting. In the model, there are multiple equilibria with various money holdings distributions. The purpose of this study is to investigate the behavior of subjects and the efficiency of endogenously determined money holdings distributions and transaction prices in this environment. We find that such endogenizing enhanced the coordination of subjects through monetary exchange. The subjects endogenously reduced the trade friction of monetary exchanges and chose relatively efficient money holdings distributions and transaction prices.

Suggested Citation

  • Kamiya, Kazuya & Kobayashi, Hajime & Shichijo, Tatsuhiro & Shimizu, Takashi, 2021. "On the monetary exchange with multiple equilibrium money holdings distributions: An experimental approach," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 206-232.
    • Handle: RePEc:eee:jeborg:v:183:y:2021:i:c:p:206-232
    DOI: 10.1016/j.jebo.2020.12.014
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    References listed on IDEAS

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    More about this item

    Keywords

    Real indeterminacy; Monetary search; Divisible money; Experiment; Money holdings distributions;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General

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