The Coordination Value of Monetary Exchange: Experimental Evidence

Quaderni DSE Working Paper No. 754

51 Pages Posted: 11 Jun 2011

See all articles by Gabriele Camera

Gabriele Camera

Chapman University - Economic Science Institute; University of Bologna - Dept. of Economics

Marco Casari

University of Bologna - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: June 7, 2011

Abstract

Under what conditions can cooperation be sustained in a network of strangers? Here we study the role of institutions and uncover a new behavioral foundation for the use of monetary systems.

In an experiment, anonymous subjects could cooperate or defect in bilateral random encounters. This sequence of encounters was indefinite; hence multiple equilibria were possible, including full intertemporal cooperation supported by a social norm based on community punishment of defectors. We report that such social norm did not emerge. Instead, the availability of intrinsically worthless tokens favored the coordination on intertemporal cooperation in ways that networks of strangers were unable to achieve through social norms.

Keywords: money, cooperation, information, trust, folk theorem, repeated games

JEL Classification: C70, C90, D80

Suggested Citation

Camera, Gabriele and Casari, Marco, The Coordination Value of Monetary Exchange: Experimental Evidence (June 7, 2011). Quaderni DSE Working Paper No. 754. Available at SSRN: https://ssrn.com/abstract=1861151 or http://dx.doi.org/10.2139/ssrn.1861151

Gabriele Camera (Contact Author)

Chapman University - Economic Science Institute ( email )

Orange, CA 92866
United States

HOME PAGE: http://www1.chapman.edu/~camera/

University of Bologna - Dept. of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

Marco Casari

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

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