IDEAS home Printed from https://ideas.repec.org/p/bol/bodewp/wp1030.html
   My bibliography  Save this paper

Money is more than memory

Author

Listed:
  • M. Bigoni
  • G. Camera
  • M. Casari

Abstract

Impersonal exchange is the hallmark of an advanced society and money is one key institution that supports it. Economic theory regards money as a crude arrangement for monitoring counterparts past conduct. If so, then a public record of past actions or memory should supersede the function performed by money. This intriguing theoretical postulate remains untested. In an experiment, we show that the suggested functional equivalence between money and memory does not translate into an empirical equivalence. Monetary systems perform a richer set of functions than just revealing past behaviors, which are crucial in promoting large-scale cooperation.

Suggested Citation

  • M. Bigoni & G. Camera & M. Casari, 2015. "Money is more than memory," Working Papers wp1030, Dipartimento Scienze Economiche, Universita' di Bologna.
  • Handle: RePEc:bol:bodewp:wp1030
    as

    Download full text from publisher

    File URL: http://amsacta.unibo.it/4350/1/WP1030.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ernst Fehr & Simon Gächter, 2000. "Fairness and Retaliation: The Economics of Reciprocity," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 159-181, Summer.
    2. Pedro Dal Bó, 2005. "Cooperation under the Shadow of the Future: Experimental Evidence from Infinitely Repeated Games," American Economic Review, American Economic Association, vol. 95(5), pages 1591-1604, December.
    3. Avner Greif, 2006. "History Lessons: The Birth of Impersonal Exchange: The Community Responsibility System and Impartial Justice," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 221-236, Spring.
    4. David J. Cooper & Kai-Uwe K?hn, 2014. "Communication, Renegotiation, and the Scope for Collusion," American Economic Journal: Microeconomics, American Economic Association, vol. 6(2), pages 247-278, May.
    5. Pedro Dal Bó & Guillaume R. Fréchette, 2018. "On the Determinants of Cooperation in Infinitely Repeated Games: A Survey," Journal of Economic Literature, American Economic Association, vol. 56(1), pages 60-114, March.
    6. C.Mónica Capra & Tomomi Tanaka & ColinF. Camerer & Lauren Feiler & Veronica Sovero & CharlesN. Noussair, 2009. "The Impact of Simple Institutions in Experimental Economies with Poverty Traps," Economic Journal, Royal Economic Society, vol. 119(539), pages 977-1009, July.
    7. D. Aliprantis, C. & Camera, G. & Puzzello, D., 2007. "Anonymous markets and monetary trading," Journal of Monetary Economics, Elsevier, vol. 54(7), pages 1905-1928, October.
    8. Kocherlakota, Narayana R., 1998. "Money Is Memory," Journal of Economic Theory, Elsevier, vol. 81(2), pages 232-251, August.
    9. Marimon, Ramon & Sunder, Shyam, 1993. "Indeterminacy of Equilibria in a Hyperinflationary World: Experimental Evidence," Econometrica, Econometric Society, vol. 61(5), pages 1073-1107, September.
    10. Thomas R. Palfrey & Howard Rosenthal, 1994. "Repeated Play, Cooperation and Coordination: An Experimental Study," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(3), pages 545-565.
    11. Maria Bigoni & Gabriele Camera & Marco Casari, 2019. "Partners or Strangers? Cooperation, Monetary Trade, and the Choice of Scale of Interaction," American Economic Journal: Microeconomics, American Economic Association, vol. 11(2), pages 195-227, May.
    12. Roberto A. Weber, 2006. "Managing Growth to Achieve Efficient Coordination in Large Groups," American Economic Review, American Economic Association, vol. 96(1), pages 114-126, March.
    13. McCabe, Kevin A., 1989. "Fiat money as a store of value in an experimental market," Journal of Economic Behavior & Organization, Elsevier, vol. 12(2), pages 215-231, October.
    14. Arno Riedl & Ingrid M. T. Rohde & Martin Strobel, 2016. "Efficient Coordination in Weakest-Link Games," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(2), pages 737-767.
    15. Offerman, Theo & Potters, Jan & Verbon, Harrie A. A., 2001. "Cooperation in an Overlapping Generations Experiment," Games and Economic Behavior, Elsevier, vol. 36(2), pages 264-275, August.
    16. Huber, Jürgen & Shubik, Martin & Sunder, Shyam, 2014. "Sufficiency of an outside bank and a default penalty to support the value of fiat money: Experimental evidence," Journal of Economic Dynamics and Control, Elsevier, vol. 47(C), pages 317-337.
    17. Iris Bohnet & Steffen Huck, 2004. "Repetition and Reputation: Implications for Trust and Trustworthiness When Institutions Change," American Economic Review, American Economic Association, vol. 94(2), pages 362-366, May.
    18. Ostroy, Joseph M. & Starr, Ross M., 1990. "The transactions role of money," Handbook of Monetary Economics, in: B. M. Friedman & F. H. Hahn (ed.), Handbook of Monetary Economics, edition 1, volume 1, chapter 1, pages 3-62, Elsevier.
    19. Martin A. Nowak & Karl Sigmund, 1998. "Evolution of indirect reciprocity by image scoring," Nature, Nature, vol. 393(6685), pages 573-577, June.
    20. Townsend, Robert M, 1987. "Economic Organization with Limited Communication," American Economic Review, American Economic Association, vol. 77(5), pages 954-971, December.
    21. Elinor Ostrom, 2010. "Beyond Markets and States: Polycentric Governance of Complex Economic Systems," American Economic Review, American Economic Association, vol. 100(3), pages 641-672, June.
    22. Camera, Gabriele & Gioffré, Alessandro, 2014. "Game-theoretic foundations of monetary equilibrium," Journal of Monetary Economics, Elsevier, vol. 63(C), pages 51-63.
    23. Erik O. Kimbrough & Vernon L. Smith & Bart J. Wilson, 2008. "Historical Property Rights, Sociality, and the Emergence of Impersonal Exchange in Long-Distance Trade," American Economic Review, American Economic Association, vol. 98(3), pages 1009-1039, June.
    24. Gächter, Simon & Herrmann, Benedikt, 2011. "The limits of self-governance when cooperators get punished: Experimental evidence from urban and rural Russia," European Economic Review, Elsevier, vol. 55(2), pages 193-210, February.
    25. 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.
    26. Kranton, Rachel E, 1996. "Reciprocal Exchange: A Self-Sustaining System," American Economic Review, American Economic Association, vol. 86(4), pages 830-851, September.
    27. Abreu, Dilip & Pearce, David & Stacchetti, Ennio, 1990. "Toward a Theory of Discounted Repeated Games with Imperfect Monitoring," Econometrica, Econometric Society, vol. 58(5), pages 1041-1063, September.
    28. Douglass C. North, 1991. "Institutions," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 97-112, Winter.
    29. Ryan Oprea, 2014. "Survival versus Profit Maximization in a Dynamic Stochastic Experiment," Econometrica, Econometric Society, vol. 82, pages 2225-2255, November.
    30. Pedro Dal Bo & Guillaume R. Frochette, 2011. "The Evolution of Cooperation in Infinitely Repeated Games: Experimental Evidence," American Economic Review, American Economic Association, vol. 101(1), pages 411-429, February.
    31. M.A. Nowak & K. Sigmund, 1998. "Evolution of Indirect Reciprocity by Image Scoring/ The Dynamics of Indirect Reciprocity," Working Papers ir98040, International Institute for Applied Systems Analysis.
    32. Dean Corbae & Ted Temzelides & Randall Wright, 2003. "Directed Matching and Monetary Exchange," Econometrica, Econometric Society, vol. 71(3), pages 731-756, May.
    33. Deck, Cary A. & McCabe, Kevin A. & Porter, David P., 2006. "Why stable fiat money hyperinflates: Results from an experimental economy," Journal of Economic Behavior & Organization, Elsevier, vol. 61(3), pages 471-486, November.
    34. Matthias Blonski & Peter Ockenfels & Giancarlo Spagnolo, 2011. "Equilibrium Selection in the Repeated Prisoner's Dilemma: Axiomatic Approach and Experimental Evidence," American Economic Journal: Microeconomics, American Economic Association, vol. 3(3), pages 164-192, August.
    35. Townsend, Robert M, 1987. "Models as Economies," Economic Journal, Royal Economic Society, vol. 98(390), pages 1-24, Supplemen.
    36. Ostroy, Joseph M, 1973. "The Informational Efficiency of Monetary Exchange," American Economic Review, American Economic Association, vol. 63(4), pages 597-610, September.
    37. Binmore, Ken, 2005. "Natural Justice," OUP Catalogue, Oxford University Press, number 9780195178111, December.
    38. Maria Bigoni & Sven-Olof Fridolfsson & Chloé Le Coq & Giancarlo Spagnolo, 2012. "fines, leniency, and rewards in antitrust," RAND Journal of Economics, RAND Corporation, vol. 43(2), pages 368-390, June.
    39. Michihiro Kandori, 1992. "Social Norms and Community Enforcement," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 59(1), pages 63-80.
    40. Engle-Warnick, J. & Slonim, Robert L., 2006. "Learning to trust in indefinitely repeated games," Games and Economic Behavior, Elsevier, vol. 54(1), pages 95-114, January.
    41. Hayek, F. A., 1991. "The Fatal Conceit," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226320663 edited by Bartley, III, W. W., September.
    42. Bolton, Gary E. & Katok, Elena & Ockenfels, Axel, 2005. "Cooperation among strangers with limited information about reputation," Journal of Public Economics, Elsevier, vol. 89(8), pages 1457-1468, August.
    43. Gabriele Camera & Marco Casari, 2009. "Cooperation among Strangers under the Shadow of the Future," American Economic Review, American Economic Association, vol. 99(3), pages 979-1005, June.
    44. Camerer, Colin & Dreber, Anna & Forsell, Eskil & Ho, Teck-Hua & Huber, Jurgen & Johannesson, Magnus & Kirchler, Michael & Almenberg, Johan & Altmejd, Adam & Chan, Taizan & Heikensten, Emma & Holzmeist, 2016. "Evaluating replicability of laboratory experiments in Economics," MPRA Paper 75461, University Library of Munich, Germany.
    45. John Duffy & Daniela Puzzello, 2014. "Gift Exchange versus Monetary Exchange: Theory and Evidence," American Economic Review, American Economic Association, vol. 104(6), pages 1735-1776, June.
    46. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Konstantin Chatziathanasiou & Svenja Hippel & Michael Kurschilgen, 2020. "Property, Redistribution, and the Status Quo," Munich Papers in Political Economy 02, Munich School of Politics and Public Policy and the School of Management at the Technical University of Munich.
    2. Guilherme Carmona, 2021. "On the optimality of monetary trading," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 71(3), pages 1121-1160, April.
    3. Gabriele Camera & Marco Casari, 2018. "Monitoring institutions in indefinitely repeated games," Experimental Economics, Springer;Economic Science Association, vol. 21(3), pages 673-691, September.
    4. Lambrecht, Marco & Sofianos, Andis & Xu, Yilong, 2021. "Does mining fuel bubbles? An experimental study on cryptocurrency markets," Working Papers 0703, University of Heidelberg, Department of Economics.
    5. Maria Bigoni & Gabriele Camera & Marco Casari, 2019. "Cooperation among strangers with and without a monetary system," Working Papers 19-01, Chapman University, Economic Science Institute.
    6. Borgonovo, Emanuele & Caselli, Stefano & Cillo, Alessandra & Masciandaro, Donato & Rabitti, Giovanni, 2021. "Money, privacy, anonymity: What do experiments tell us?," Journal of Financial Stability, Elsevier, vol. 56(C).
    7. Eduardo Ferraciolli & Tanya Araújo, 2023. "Agent-based Modeling and the Sociology of Money: a Framework for the Study of Coordination and Plurality," Working Papers REM 2023/0285, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    8. M. Bigoni & G. Camera & M. Casari, 2015. "Money and the Scale of Cooperation," Working Papers wp1045, Dipartimento Scienze Economiche, Universita' di Bologna.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Maria Bigoni & Gabriele Camera & Marco Casari, 2019. "Cooperation among strangers with and without a monetary system," Working Papers 19-01, Chapman University, Economic Science Institute.
    2. Maria Bigoni & Gabriele Camera & Marco Casari, 2019. "Partners or Strangers? Cooperation, Monetary Trade, and the Choice of Scale of Interaction," American Economic Journal: Microeconomics, American Economic Association, vol. 11(2), pages 195-227, May.
    3. Maria Bigoni & Gabriele Camera & Marco Casari, 2015. "Money and the Scale of Cooperation," Working Papers 15-28, Chapman University, Economic Science Institute.
    4. Gabriele Camera & Dror Goldberg & Avi WeissBar-Ilan, 2020. "Endogenous Market Formation and Monetary Trade: An Experiment," Journal of the European Economic Association, European Economic Association, vol. 18(3), pages 1553-1588.
    5. 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.
    6. Gabriele Camera & Cary Deck & David Porter, 2016. "Do Economic Inequalities Affect Long-Run Cooperation?," Working Papers 16-18, Chapman University, Economic Science Institute.
    7. Camera, Gabriele & Casari, Marco & Bigoni, Maria, 2012. "Cooperative strategies in anonymous economies: An experiment," Games and Economic Behavior, Elsevier, vol. 75(2), pages 570-586.
    8. Gabriele Camera & Marco Casari, 2018. "Monitoring institutions in indefinitely repeated games," Experimental Economics, Springer;Economic Science Association, vol. 21(3), pages 673-691, September.
    9. Philip Brookins & Dmitry Ryvkin & Andrew Smyth, 2021. "Indefinitely repeated contests: An experimental study," Experimental Economics, Springer;Economic Science Association, vol. 24(4), pages 1390-1419, December.
    10. Gabriele Camera & Marco Casari, 2009. "Cooperation among Strangers under the Shadow of the Future," American Economic Review, American Economic Association, vol. 99(3), pages 979-1005, June.
    11. 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.
    12. Gabriele Camera & Cary Deck & David Porter, 2019. "Do Economic Inequalities Affect Long-Run Cooperation & Prosperity?," Working Papers 19-09, Chapman University, Economic Science Institute.
    13. Ghidoni, Riccardo & Cleave, Blair L. & Suetens, Sigrid, 2019. "Perfect and imperfect strangers in social dilemmas," European Economic Review, Elsevier, vol. 116(C), pages 148-159.
    14. Camera, Gabriele & Gioffré, Alessandro, 2014. "Game-theoretic foundations of monetary equilibrium," Journal of Monetary Economics, Elsevier, vol. 63(C), pages 51-63.
    15. Gabriele Camera & Cary Deck & David Porter, 2020. "Do economic inequalities affect long-run cooperation and prosperity?," Experimental Economics, Springer;Economic Science Association, vol. 23(1), pages 53-83, March.
    16. Ghidoni, Riccardo & Suetens, Sigrid, 2019. "Empirical Evidence on Repeated Sequential Games," Other publications TiSEM ff3a441f-e196-4e45-ba59-c, Tilburg University, School of Economics and Management.
    17. Landeo, Claudia M. & Spier, Kathryn E., 2015. "Incentive contracts for teams: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 119(C), pages 496-511.
    18. John Duffy & Dietmar Fehr, 2018. "Equilibrium selection in similar repeated games: experimental evidence on the role of precedents," Experimental Economics, Springer;Economic Science Association, vol. 21(3), pages 573-600, September.
    19. Bigoni, Maria & Camera, Gabriele & Casari, Marco, 2013. "Strategies of cooperation and punishment among students and clerical workers," Journal of Economic Behavior & Organization, Elsevier, vol. 94(C), pages 172-182.
    20. Maximilian Andres, 2024. "Equilibrium selection in infinitely repeated games with communication," CEPA Discussion Papers 75, Center for Economic Policy Analysis.

    More about this item

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bol:bodewp:wp1030. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dipartimento Scienze Economiche, Universita' di Bologna (email available below). General contact details of provider: https://edirc.repec.org/data/sebolit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.