Money as a medium of exchange in an economy with artificially intelligent agents

Ramon Marimon, Ellen McGrattan, Thomas J. Sargent

Research output: Contribution to journalArticlepeer-review

189 Scopus citations

Abstract

We study the exchange economies of Kiyotaki and Wright (1989) in which agents must use a commodity or fiat money as a medium of exchange if trade is to occur. Our agents are artificially intelligent and are modeled as using classifier systems to make decisions. In the assignment of credit within the classifier systems, we introduce some innovations designed to study sequential decision problems in a multi-agent environment. For most economies that we have simulated, trading and consumption patterns converge to a stationary Nash equilibrium even if agents start with random rules. In economies with multiple equilibria, the only equilibrium that emerges in our simulations is the one in which goods with low storage costs play the role of medium of exchange (i.e., the 'fundamental equilibrium' of Kiyotaki and Wright).

Original languageEnglish (US)
Pages (from-to)329-373
Number of pages45
JournalJournal of Economic Dynamics and Control
Volume14
Issue number2
DOIs
StatePublished - May 1990

Bibliographical note

Funding Information:
*This research began with visits by Marimon and Sargent to the Santa Fe Institute. We thank Brian Arthur and John Holland for several helpful discussions about genetic algorithms at the Santa Fe Institute. We also thank Randall Wright and Nancy Stokey for helpful comments on an earlier draft. Sargent’s research was supported by a grant from the National Science Foundation to the National Bureau of Economic Research. Marimon’s research was supported by a grant from the National Science Foundation and by the National Fellows Program at the Hoover Institution. This paper is an abbreviated version of a Hoover Institution working paper with the same title, which is available from the authors upon request.

Fingerprint

Dive into the research topics of 'Money as a medium of exchange in an economy with artificially intelligent agents'. Together they form a unique fingerprint.

Cite this