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Gift Exchange versus Monetary Exchange: Theory and Evidence
2014
The American Economic Review
We study the Lagos and Wright (2005) model of monetary exchange in the laboratory. With a finite population of sufficiently patient agents, this model has a unique monetary equilibrium and a continuum of non-monetary gift exchange equilibria, some of which Pareto dominate the monetary equilibrium. We find that subjects avoid the gift-exchange equilibria in favor of the monetary equilibrium. We also study versions of the model without money where all equilibria involve non-monetary
doi:10.1257/aer.104.6.1735
fatcat:27qrcni2f5ajhpelkuiz2sfjgi