Multiscaling Edge Effects in an Agent-based Money Emergence Model

Abstract

An agent-based computational economical toy model for the emergence of money from the initial barter trading, inspired by Menger's postulate that money can spontaneously emerge in a commodity exchange economy, is extensively studied. The model considered, while manageable, is significantly complex, however. It is already able to reveal phenomena that can be interpreted as emergence and collapse of money as well as the related competition effects. In particular, it is shown that -as an extra emerging effect -the money lifetimes near the critical threshold value develop multiscaling, which allow one to set parallels to critical phenomena and, thus, to the real financial markets.

Coexistence of several currencies in presence of increasing returns to adoption

“…Recent models have pushed further Menger's basic idea either by trying to introduce social aspects of money [8], or providing a unified framework able to explain at the same time the emergence of a single currency and some other economic phenomena. Yasutomi's [11] model, further refined by [12,13], can also describe the collapse of a currency, while Donangelo and Sneppen's links the emergence of money to its anomalous fluctuation in value [14]. Duffy and Ochs [7] tested some predictions of Kiyotaki and Wright model [4] in laboratory experiments.…”

“…On the first point, most previous work assume some more realistic exchange mechanism. For example, models inspired by Yasutomi's model [11,12,13] take, as elementary interaction between two agents, the "transaction", which "consists of several steps including search of the cotrader, exchange of particular goods, change of the agent's buying preferences and finally the production and consumption phase". On the second point, unlike most models, we do not assume a completely connected interaction network, which leads to simpler analytical treatments but obscures the local aspects of economic transactions.…”

Agent-Based Modelling of a Commodity Market Dynamics

“…Therefore such V max defines the dominant commodity strength, which could be regarded as a commodity based money as discussed in [7,8].…”

“…[5,8,9]), when both traders have an unequal number of commodities of different types on their wishlists, they consider the total value of the commodities to be exchanged. They exchange commodities on their wish-lists, starting from items of the highest value.…”

“…Nonetheless, it proved to be quite useful for exposing some universal features of the complex systems in general, and economics markets in particular. Application of Yasutomi's approach to modelling the commodity market allowed to reproduce some real market behavior with statistical signatures of the money emergence phenomena [8] as well as provided some evidence of the competition of commodities for a dominant status of the so-called commoditybased money [9].…”