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Endogenous currency formation in an online environment: The case of Diablo II

Author

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  • Alexander Salter
  • Solomon Stein

Abstract

This paper presents a case study of the emergence of currency from a barter economy in an online game community. We use this case study to attempt to shed light on the relative importance of various types of frictions that lead to the emergence of money in search-theoretic models of currency formation. In particular, our study highlights the importance of exchange frictions relative to epistemic frictions. Using the records of an online message board dedicated to facilitating trades within the game, we document the emergence of currency and its stability over time. Copyright Springer Science+Business Media New York 2016

Suggested Citation

  • Alexander Salter & Solomon Stein, 2016. "Endogenous currency formation in an online environment: The case of Diablo II," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 29(1), pages 53-66, March.
    • Handle: RePEc:kap:revaec:v:29:y:2016:i:1:p:53-66
    DOI: 10.1007/s11138-014-0289-1
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    Citations

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    Cited by:

    1. Solomon Stein, 2015. "Cultural and institutional co-determination: the case of legitimacy in exchange in Diablo II," Chapters, in: Laura E. Grube & Virgil Henry Storr (ed.), Culture and Economic Action, chapter 20, pages 436-458, Edward Elgar Publishing.
    2. Laura E. Grube & Virgil Henry Storr (ed.), 2015. "Culture and Economic Action," Books, Edward Elgar Publishing, number 14354.
    3. Zuobin Ying & Wusong Lan & Chen Deng & Lu Liu & Ximeng Liu, 2023. "DVIT—A Decentralized Virtual Items Trading Forum with Reputation System," Mathematics, MDPI, vol. 11(2), pages 1-23, January.

    More about this item

    Keywords

    Exchange frictions; Epistemic frictions; Kiyotaki-Wright; Medium of exchange; Menger; Money emergence; Online societies; E40; E42; E49;
    All these keywords.

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E49 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Other

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