The Superiority of Monetary over Barter Exchange: Experimental Results and Policy Implications

24 Pages Posted: 9 Jul 2008 Last revised: 25 Nov 2009

Multiple version iconThere are 2 versions of this paper

Date Written: November 9, 2009

Abstract

William Stanley Jevons suggested that monetary exchange is socially superior to barter exchange because agents’ optimization is simplified by the use of money. We experimentally study how subjects perform under monetary and barter exchange and find that a majority of subjects achieve a higher utility level in the monetized economy. Our laboratory findings indicate that, at least, government has a role in promoting a common unit of account.

Keywords: Advantages of monetary exchange, experimental monetary economics, bounded rationality

JEL Classification: E40, C91, D60

Suggested Citation

Rötheli, Tobias F., The Superiority of Monetary over Barter Exchange: Experimental Results and Policy Implications (November 9, 2009). Available at SSRN: https://ssrn.com/abstract=1157426 or http://dx.doi.org/10.2139/ssrn.1157426

Tobias F. Rötheli (Contact Author)

University of Erfurt ( email )

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