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Equilibrium Selection in Monetary Search Models: An Experimental Approach

Listed author(s):
  • Kazuya Kamiya

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

  • Hajime Kobayashi

    (Kansai University, Japan)

  • Tatsuhiro Shichijo

    (Osaka Prefecture University, Japan)

  • Takashi Shimizu

    (Kobe University, Japan)

It is known that there exists a multiplicity (indeterminacy) of stationary equilibria in search models with divisible money. This paper investigate whether some specific stationary equilibrium is selected through economic experiments. We observe that in some treatments there is a tendency to converge to the most efficient equilibrium. However, as a whole, there remains some degree of indeterminacy.

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File URL: http://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2017-03.pdf
File Function: First version, 2017
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Paper provided by Research Institute for Economics & Business Administration, Kobe University in its series Discussion Paper Series with number DP2017-03.

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Length: 30 pages
Date of creation: Mar 2017
Handle: RePEc:kob:dpaper:dp2017-03
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  1. Jack Ochs & John Duffy, 1999. "Emergence of Money as a Medium of Exchange: An Experimental Study," American Economic Review, American Economic Association, vol. 89(4), pages 847-877, September.
  2. Kamiya, Kazuya & Shimizu, Takashi, 2011. "Stationary monetary equilibria with strictly increasing value functions and non-discrete money holdings distributions: An indeterminacy result," Journal of Economic Theory, Elsevier, vol. 146(5), pages 2140-2150, September.
  3. Ricardo Lagos & Randall Wright, 2005. "A Unified Framework for Monetary Theory and Policy Analysis," Journal of Political Economy, University of Chicago Press, vol. 113(3), pages 463-484, June.
  4. Akihiko Matsui & Takashi Shimizu, 2005. "A Theory Of Money And Marketplaces," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(1), pages 35-59, February.
  5. Green, Edward J. & Zhou, Ruilin, 1998. "A Rudimentary Random-Matching Model with Divisible Money and Prices," Journal of Economic Theory, Elsevier, vol. 81(2), pages 252-271, August.
  6. Schmidt, David & Shupp, Robert & Walker, James M. & Ostrom, Elinor, 2003. "Playing safe in coordination games:: the roles of risk dominance, payoff dominance, and history of play," Games and Economic Behavior, Elsevier, vol. 42(2), pages 281-299, February.
  7. McKelvey Richard D. & Palfrey Thomas R., 1995. "Quantal Response Equilibria for Normal Form Games," Games and Economic Behavior, Elsevier, vol. 10(1), pages 6-38, July.
  8. Kamiya, Kazuya & Shimizu, Takashi, 2006. "Real indeterminacy of stationary equilibria in matching models with divisible money," Journal of Mathematical Economics, Elsevier, vol. 42(4-5), pages 594-617, August.
  9. Edward J. Green & Ruilin Zhou, 2002. "Dynamic Monetary Equilibrium in a Random Matching Economy," Econometrica, Econometric Society, vol. 70(3), pages 929-969, May.
  10. Anderson, Simon P. & Goeree, Jacob K. & Holt, Charles A., 2001. "Minimum-Effort Coordination Games: Stochastic Potential and Logit Equilibrium," Games and Economic Behavior, Elsevier, vol. 34(2), pages 177-199, February.
  11. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
  12. Zhou, Ruilin, 1999. "Individual and Aggregate Real Balances in a Random-Matching Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(4), pages 1009-1038, November.
  13. Kazuya Kamiya & Takashi Shimizu, 2007. "On The Role Of Tax Subsidy Scheme In Money Search Models," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(2), pages 575-606, May.
  14. 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.
  15. 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.
  16. John Duffy & Jack Ochs, 2002. "Intrinsically Worthless Objects as Media of Exchange: Experimental Evidence," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(3), pages 637-674, August.
  17. GĂ©rard P. Cachon & Colin F. Camerer, 1996. "Loss-Avoidance and Forward Induction in Experimental Coordination Games," The Quarterly Journal of Economics, Oxford University Press, vol. 111(1), pages 165-194.
  18. 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.
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