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A simple search model of money with heterogeneous agents and partial acceptability

In: Recent Developments on Money and Finance

Author

Listed:
  • Andrei Shevchenko

    (Michigan State University)

  • Randall Wright

    (University of Pennsylvania)

Abstract

Summary Simple search models have equilibria where some agents accept money and others do not. We argue such equilibria should not be taken seriously. This is unfortunate if one wants a model with partial acceptability. We introduce heterogeneous agents and show partial acceptability arises naturally and robustly. There can be multiple equilibria with different degrees of acceptability. Given the type of heterogeneity we allow, the model is simple: equilibria reduce to fixed points in [0, 1]. We show that with other forms of heterogeneity equilibria are fixed points in set space, and there is no method to reduce this to a problem in R 1.

Suggested Citation

  • Andrei Shevchenko & Randall Wright, 2006. "A simple search model of money with heterogeneous agents and partial acceptability," Studies in Economic Theory, in: Charalambos D. Aliprantis & Nicholas C. Yannelis & Gabriele Camera (ed.), Recent Developments on Money and Finance, pages 223-232, Springer.
    • Handle: RePEc:spr:steccp:978-3-540-29500-6_11
    DOI: 10.1007/3-540-29500-3_11
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    Cited by:

    1. is not listed on IDEAS
    2. Bonetto, Federico & Iacopetta, Maurizio, 2019. "A dynamic analysis of nash equilibria in search models with fiat money," Journal of Mathematical Economics, Elsevier, vol. 84(C), pages 207-224.
    3. Masters, Adrian, 2008. "Unpleasant middlemen," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 73-86, October.
    4. repec:spo:wpmain:info:hdl:2441/48v4b2d60n9bipfp9hcmbgtucs is not listed on IDEAS
    5. Hull, Isaiah & Sattath, Or, 2021. "Revisiting the Properties of Money," Working Paper Series 406, Sveriges Riksbank (Central Bank of Sweden).
    6. S…Bastien Lotz & Andrei Shevchenko & Christopher Waller, 2007. "Heterogeneity and Lotteries in Monetary Search Models," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(2-3), pages 703-712, March.
    7. Janet Hua Jiang & Peter Norman & Daniela Puzzello & Bruno Sultanum & Randall Wright, 2024. "Is Money Essential? An Experimental Approach," Journal of Political Economy, University of Chicago Press, vol. 132(9), pages 2972-2998.
    8. Federico Bonetto & Maurizio Iacopetta, 2019. "A dynamic analysis of nash equilibria in search models with fiat money," Post-Print hal-03403584, HAL.
    9. Davis, Douglas & Korenok, Oleg & Norman, Peter & Sultanum, Bruno & Wright, Randall, 2022. "Playing with money," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 1221-1239.
    10. Isaiah Hull & Or Sattath, 2024. "The properties of contemporary money," Journal of Economic Surveys, Wiley Blackwell, vol. 38(4), pages 1132-1155, September.
    11. Colacelli, Mariana & Blackburn, David J.H., 2009. "Secondary currency: An empirical analysis," Journal of Monetary Economics, Elsevier, vol. 56(3), pages 295-308, April.
    12. Williamson, Stephen & Wright, Randall, 2010. "New Monetarist Economics: Models," Handbook of Monetary Economics, in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 2, pages 25-96, Elsevier.
    13. Federico Bonetto & Maurizio Iacopetta, 2019. "A dynamic analysis of nash equilibria in search models with fiat money," Sciences Po Economics Publications (main) hal-03403584, HAL.
    14. Federico Bonetto & Maurizio Iacopetta, 2019. "A Dynamic Analysis of Nash Equilibria in Search Models with Fiat Money ," Post-Print halshs-03515530, HAL.

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