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Intrinsically Worthless Objects as Media of Exchange: Experimental Evidence *

Intrinsically Worthless Objects as Media of Exchange: Experimental Evidence * This article reports results from an experiment that examines whether an intrinsically worthless, ‘‘token'’ object serves as a medium of exchange in a laboratory implementation of Kiyotaki and Wright's search model of money. The theory admits Nash equilibria in which the token object is or is not used as a medium of exchange. We find that subjects nearly always offer to trade for the token object when such a trade lowers their storage costs. However, subjects frequently refuse to offer to trade the token object for more costly‐to‐store goods when the theory predicts they should make such trades. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Economic Review Wiley

Intrinsically Worthless Objects as Media of Exchange: Experimental Evidence *

International Economic Review , Volume 43 (3) – Aug 1, 2002

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References (24)

Publisher
Wiley
Copyright
Copyright © 2002 Wiley Subscription Services, Inc., A Wiley Company
ISSN
0020-6598
eISSN
1468-2354
DOI
10.1111/1468-2354.t01-1-00030
Publisher site
See Article on Publisher Site

Abstract

This article reports results from an experiment that examines whether an intrinsically worthless, ‘‘token'’ object serves as a medium of exchange in a laboratory implementation of Kiyotaki and Wright's search model of money. The theory admits Nash equilibria in which the token object is or is not used as a medium of exchange. We find that subjects nearly always offer to trade for the token object when such a trade lowers their storage costs. However, subjects frequently refuse to offer to trade the token object for more costly‐to‐store goods when the theory predicts they should make such trades.

Journal

International Economic ReviewWiley

Published: Aug 1, 2002

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