LEEM Seminar - Kazuya Kamiya (Kobe University, Japan)

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Equilibrium Selection in Dynamic Auction Markets with Fiat Money: An Experimental Approach

27-03-2019 - 12h00 à 14h00 - Salle SCI - ISEM

Title: Equilibrium Selection in Dynamic Auction Markets with Fiat Money: An Experimental Approach

Authors: Kazuya Kamiya, Hajime Kobayashi, Tatshuhiro Shichijo and Takashi Shimizu

Abstract: In this paper, we study a dynamic auction market model with fiat money in the laboratory. It is known that there are multiple equilibria in the model. We study neutrality of money; that is, we investigate whether the result changes when doubling the amount of money in the initial money holdings distribution. We find that it has no real effect and results in proportional changes in transaction prices. That is, although there are multiple equilibria in the model, the subjects coordinate in essentially the same transaction price when doubling the amount of money in the initial distribution.

We also find that the transaction price varies depending on the initial money holdings distribution; more precisely, the more equally the initial money holdings are distributed, the lower the transaction price is.

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