Research Seminar by Sergey Popov (University of Illinois): «Learning to Love Money»

Thursday, November 25 at 4.30 pm ICEF held the Research seminar.
Venue: Pokrovski Bulvar, 11, Room Zh-822
Speaker: Sergey Popov (University of Illinois)
Theme: «Learning to Love Money»

 

Abstract: Literature on micro-foundations of money argues that using money to exploit benefits from specialization without mutual coincidence of wants can be sustained as an equilibrium when the threat of deviating into not accepting money forever is intimidating enough. However, this logic requires sustainability of an equilibrium where no one uses money, and one can observe how no economy in the outside world is staying in such an equilibrium forever. We step away from the assumption of perfect rationality, and demonstrate that in the framework with learning dynamics the outcome where no one is using money might be extremely improbable, even when it is stochastically stable. Simulations demonstrate that it might not be strategically rational to refrain from accepting money; moreover, accepting money when no one else does might be strategically optimal. Therefore, we argue, existence of money in economies might be explained by learning behavior of agents rather than perfect rationality of agents.
Everyone interested is welcome to attend!

---

Forthcoming seminars

Past seminars