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On the Micro-foundations of Money: The Capitol Hill Baby-Sitting Co-op

Author

Listed:
  • Thorsten Hens
  • Klaus Reiner Schenk-Hopp�
  • Bodo Vogt

Abstract

We suggest a new micro-foundation of money in which markets are well-organized but consumers' preferences are stochastic. In this model, we solve for stationary equilibria and show that there is an optimum quantity of money. The rational solution of our model is compared with actual behavior in a laboratory experiment. It turns out that the experiment gives support to our theoretical results.

Suggested Citation

  • Thorsten Hens & Klaus Reiner Schenk-Hopp� & Bodo Vogt, "undated". "On the Micro-foundations of Money: The Capitol Hill Baby-Sitting Co-op," IEW - Working Papers 108, Institute for Empirical Research in Economics - University of Zurich.
    • Handle: RePEc:zur:iewwpx:108
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    File URL: https://www.zora.uzh.ch/id/eprint/52008/1/iewwp108.pdf
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    Cited by:

    1. Reto Foellmi & Urs Meister, 2005. "Product-Market Competition in the Water Industry: Voluntary Non-discriminatory Pricing," Journal of Industry, Competition and Trade, Springer, vol. 5(2), pages 115-135, June.

    More about this item

    Keywords

    micro foundations of money; optimal quantity of money;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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