Emergence of Money in Different Types of Networks: an Agent-Based Approach

32 Pages Posted: 28 Mar 2022 Last revised: 21 Feb 2023

Date Written: February 18, 2022

Abstract

This study employs a novel agent-based model to examine how networks influence the emergence of multiple goods as media of exchange in a decentralized economy. The model implements the evolutionary process of the Kiyotaki-Wright (KW) model (1989), which explains the endogenous emergence of media of exchange. The findings indicate that all the agents behave according to the KW model, where some agents prefer to accept a higher storage cost good over a lower storage cost good because they speculate having a shorter wait for trading their consumption goods. The KW model is extended in this study to incorporate different types of networks and shows that networks can cause agents to adopt speculative strategies. The results highlight the emergence of multiple goods as media of exchange is a function of networks.

Keywords: Money, Agent-Based Models, Networks, Learning, Artificial Agents

JEL Classification: C63, D83, D85, E40

Suggested Citation

Kim, Jae Hyoung, Emergence of Money in Different Types of Networks: an Agent-Based Approach (February 18, 2022). Swedish House of Finance Research Paper No. 22-11, Available at SSRN: https://ssrn.com/abstract=4037872 or http://dx.doi.org/10.2139/ssrn.4037872

Jae Hyoung Kim (Contact Author)

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

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