Limited memory and the essentiality of money
This paper investigates the relationship between memory and the essentiality of money. We consider a random matching economy with a large finite population in which commitment is not possible and memory is limited in the sense that only a fraction m E(0; 1) of the population has publicly observable histories. We show that no matter how limited memory is, there exists a social norm that achieves the first best regardless of the population size. In other words, money can fail to be essential irrespective of the amount of memory in the economy. This suggests that the emphasis on limited memory as a fundamental friction for money to be essential deserves a deeper examination.
|Date of creation:||25 Jun 2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 55 (011) 3799-3350
Fax: 55 (011) 3799-3357
Web page: http://eesp.fgv.br
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Okuno-Fujiwara Masahiro & Postlewaite Andrew, 1995. "Social Norms and Random Matching Games," Games and Economic Behavior, Elsevier, vol. 9(1), pages 79-109, April.
When requesting a correction, please mention this item's handle: RePEc:fgv:eesptd:221. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Núcleo de Computação da EPGE)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.