Experimental Evidence on the Essentiality and Neutrality of Money in a Search Model

Games and Economic Behavior

Sorensen

et al. 2017

Self Cite

A growing literature in experimental economics examines the conditions under which cooperation can be sustained in social-dilemma settings. In particular, several recent studies contrast cooperation levels in games in which the number of decision rounds is probabilistic to games in which the number of decision rounds is finite. We contribute to this literature by contrasting the evolution of cooperation in probabilistically and finitely repeated linear voluntary-contribution public-goods games (VCM). Consistent with past results, ceteris paribus, cooperation is found to increase in the marginal value of the public good. Additionally, as the number of decision sequences increases, there is a pronounced decrease in cooperation in the final round of finite sequences compared to those with a probabilistic end round. We do not, however, find consistent evidence that overall cooperation rates are affected by whether the number of decision rounds is finite or determined probabilistically.

“…This led us to use three sets of sequences. See also Fréchette and Yuksel (2016) and Duffy and Puzzello (2014b) for other studies following a similar approach.…”

Section: Hypothesesmentioning

confidence: 99%

An experimental study of finitely and infinitely repeated linear public goods games

Lugovskyy

Games and Economic Behavior

Sorensen

et al. 2017

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“…We chose to predraw the random numbers instead of generating random numbers in real time, during the experiments, to allow for a more accurate comparison across the two random termination treatments. Indeed, we use the same set of sequence lengths in the RT and BRT treatments to control for the effect of different sequence lengths on behavior (e.g., Fréchette and Yuksel 2017;Duffy and Puzzello 2014b). See Table 1 for a summary of the sequence lengths used for each session.…”

Section: Parameterization and The Market Gamementioning

confidence: 99%

How long is forever in the laboratory? Three implementations of an infinite-horizon monetary economy

Jiang

Journal of Economic Behavior & Organization

Zhang

2021

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Bank of Canada staff working papers provide a forum for staff to publish work-in-progress research independently from the Bank's Governing Council. This research may support or challenge prevailing policy orthodoxy. Therefore, the views expressed in this paper are solely those of the authors and may differ from official Bank of Canada views. No responsibility for them should be attributed to the Bank.

“…In subsequent work (Duffy and Puzzello, 2014b), we studied whether subjects would come to adopt a fiat money for exchange purposes if they initially participated in a Lagos–Wright economy without fiat money (gift‐exchange only). We also studied the reverse scenario where subjects initially experienced a Lagos–Wright economy with a constant supply of fiat money and then were placed in an economy where only gift exchange was allowed (fiat money was taken away).…”

Section: Related Literaturementioning

confidence: 99%

The Friedman Rule: Experimental Evidence

Duffy¹,

2021

Int Economic Review

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We evaluate the Friedman rule for optimal monetary policy in a laboratory economy based on Lagos-Wright (Journal of Economic Theory 145 (2010), 1508. We explore two implementations of Friedman's rule: one involving deflationary monetary policy and another where interest is paid on money. We compare the welfare consequences of the Friedman rule with two other policies: a constant money supply regime and a regime where the money supply grows at a constant k%. Counter to theory, we find that the Friedman rule is not welfare-improving, performing no better than the constant money regime. By one welfare measure, the k% money growth rate regime performs best.