The coordination value of monetary exchange: Experimental evidence
AbstractUnder what conditions can cooperation be sustained in a network of strangers? Here we study the role of institutions and uncover a new behavioral foundation for the use of monetary systems. In an experiment, anonymous subjects could cooperate or defect in bilateral random encounters. This sequence of encounters was indefinite; hence multiple equilibria were possible, including full intertemporal cooperation supported by a social norm based on community punishment of defectors. We report that such social norm did not emerge. Instead, the availability of intrinsically worthless tokens favored the coordination on intertemporal cooperation in ways that networks of strangers were unable to achieve through social norms.
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Bibliographic InfoPaper provided by Dipartimento Scienze Economiche, Universita' di Bologna in its series Working Papers with number wp754.
Date of creation: May 2011
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Other versions of this item:
- Gabriele Camera & Marco Casari, 2014. "The Coordination Value of Monetary Exchange: Experimental Evidence," American Economic Journal: Microeconomics, American Economic Association, vol. 6(1), pages 290-314, February.
- Gabriele Camera & Marco Casari, 2010. "The Coordination Value of Monetary Exchange: Experimental Evidence," Purdue University Economics Working Papers 1239, Purdue University, Department of Economics.
- C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
- D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-06-18 (All new papers)
- NEP-CBA-2011-06-18 (Central Banking)
- NEP-CBE-2011-06-18 (Cognitive & Behavioural Economics)
- NEP-EXP-2011-06-18 (Experimental Economics)
- NEP-NET-2011-06-18 (Network Economics)
- NEP-SOC-2011-06-18 (Social Norms & Social Capital)
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