A note on asymmetric and mixed strategy equilibria in the search-theoretic model of fiat money

B-Tier
Journal: Economic Theory
Year: 1999
Volume: 14
Issue: 2
Pages: 463-471

Score contribution per author:

2.011 = (α=2.01 / 1 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

The simple search-theoretic model of fiat money has three symmetric Nash equilibria: all agents accept money with probability 1; all agents accept money with probability 0; and all agents accept money with probability y in (0,1). Here I construct an asymmetric pure strategy equilibrium, payoff-equivalent to the symmetric mixed strategy equilibrium, where a fraction N in (0,1) of agents always accept money and 1-N never accept money. Counter to what has been conjectured previously, I find N > y. I also introduce evolutionary dynamics, and show that the economy converges to monetary exchange iff the initial proportion of agents accepting money exceeds N.

Technical Details

RePEc Handle
repec:spr:joecth:v:14:y:1999:i:2:p:463-471
Journal Field
Theory
Author Count
1
Added to Database
2026-01-29