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The Devil’s Dung? Money as a mechanism of generalized reciprocity in human societies

Author

Listed:
  • Eduardo C. Ferraciolli
  • Francesco Renzini
  • Tanya V. Araújo
  • Flaminio Squazzoni

Abstract

St. Francis of Assisi (1181/82-1226) famously called money the devil’s dung, and indeed money is often associated with greed, inequality, and corruption. Drawing on Nowak’s five rules for the evolution of cooperation, we argue here that money promotes the formation of circuits of generalized reciprocity across human groups that are fundamental to social evolution. In an evolutionary tournament, we show that money exchange is an evolutionarily stable strategy that promotes cooperation without relying on the cognitive demands of direct reciprocity or reputation mechanisms. However, we also find that excessive liquidity can be detrimental because it can distort the informational value of money as a signal of past cooperation, making defection more profitable. Our results suggest that, in addition to institutions that promoted trust and punishment, the emergence of institutions that regulated the money supply was key to maintaining generalized reciprocity within and across human groups.

Suggested Citation

  • Eduardo C. Ferraciolli & Francesco Renzini & Tanya V. Araújo & Flaminio Squazzoni, 2025. "The Devil’s Dung? Money as a mechanism of generalized reciprocity in human societies," Working Papers REM 2025/0379, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    • Handle: RePEc:ise:remwps:wp03792025
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    References listed on IDEAS

    as
    1. Bigoni, Maria & Camera, Gabriele & Casari, Marco, 2020. "Money is more than memory," Journal of Monetary Economics, Elsevier, vol. 110(C), pages 99-115.
    2. 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.
    3. Masahiko Aoki, 2013. "Institutions as cognitive media between strategic interactions and individual beliefs," Chapters, in: Comparative Institutional Analysis, chapter 17, pages 298-312, Edward Elgar Publishing.
    4. 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.
    5. Manvir Singh & Luke Glowacki, 2022. "Human social organization during the Late Pleistocene: Beyond the nomadic-egalitarian model," Post-Print hal-04038902, HAL.
    6. Jaeweon Shin & Michael Holton Price & David H. Wolpert & Hajime Shimao & Brendan Tracey & Timothy A. Kohler, 2020. "Scale and information-processing thresholds in Holocene social evolution," Nature Communications, Nature, vol. 11(1), pages 1-8, December.
    7. Nigel Dodd, 2014. "The Social Life of Money," Economics Books, Princeton University Press, edition 1, number 10319.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    money; cooperation; reputation; generalized reciprocity; evolution.;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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