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Money and Reciprocity

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  • Thorsten Hens
  • Bodo Vogt

Abstract

Based on an experimental analysis of a simple monetary economy we argue that a monetary system is more stable than one would expect from individual rationality. We show that positive reciprocity stabilizes the monetary system, provided every participant considers the feedbacks of his choice to the stationary equilibrium. If however the participants do not play stationary strategies and some participants notoriously refuse to accept money then due to negative reciprocity their behavior will eventually induce a break down of the monetary system.

Suggested Citation

  • Thorsten Hens & Bodo Vogt, "undated". "Money and Reciprocity," IEW - Working Papers 138, Institute for Empirical Research in Economics - University of Zurich.
    • Handle: RePEc:zur:iewwpx:138
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    File URL: https://www.zora.uzh.ch/id/eprint/52036/1/iewwp138.pdf
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    References listed on IDEAS

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    Cited by:

    1. Bruno S. Frey & Alois Stutzer, "undated". "Direct Democracy: Designing a Living Constitution," IEW - Working Papers 167, Institute for Empirical Research in Economics - University of Zurich.

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    More about this item

    Keywords

    monetary theory; reciprocity; experiments;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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