The Evolution of Money as a Medium of Exchange
Journal of Economic Dynamics & Control, Vol. 23, pp. 415-458, 1999
51 Pages Posted: 14 May 2009 Last revised: 26 May 2009
Date Written: 1999
Abstract
This paper uses an evolutionary approach to explain the origin of money as media of exchange in a primitive economy, where agents specialize in production for the purpose of trading for their own consumption goods. A general class of dynamics, which is consistent with Darwinian dynamics, is applied to the selection of strategies. The model produces many of the well-known results regarding the importance of intrinsic value and the proportion of agents specializing in different goods. In addition, the model also shows the importance of initial trading strategies and of the mutations of agents' strategies in selecting equilibria.
Keywords: Evolution, money as media of exchange, natural selection, Darwinian dynamics
JEL Classification: E00, D83, C73, C62
Suggested Citation: Suggested Citation
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