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

Luo, Guo Ying, The Evolution of Money as a Medium of Exchange (1999). Journal of Economic Dynamics & Control, Vol. 23, pp. 415-458, 1999. Available at SSRN: https://ssrn.com/abstract=1404172

Guo Ying Luo (Contact Author)

McMaster University

1280 Main Street West
Hamilton, Ontario L8S 4M4
Canada
905 525 9140 ext. 23983 (Phone)

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