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The Essentiality of Money in a Trading Post Economy with Random Matching

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  • Alessandro Marchesiani

Abstract

This paper studies how the structure of centralized markets may affect the efficient allocation in anonymous decentralized trades. In line with previous studies, we show that e¢ ciency in decentralized markets can be sustained in a moneyless Önite-number-of-agents setting if agents are patient enough and the price is observed with noise as long as the noise disappears, but not too fast, as the number of agents grows. We also show that the Levine-Pesendorfer noise can be applied to dynamic games, not only to static games.

Suggested Citation

  • Alessandro Marchesiani, 2022. "The Essentiality of Money in a Trading Post Economy with Random Matching," Working Papers 202223, University of Liverpool, Department of Economics.
    • Handle: RePEc:liv:livedp:202223
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    File URL: https://www.liverpool.ac.uk/media/livacuk/schoolofmanagement/docs/The,Essentiality,of,Money,in,a,Trading.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Essentiality of money; anonymity; noisy prices; trading post;
    All these keywords.

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