August, 2014

How Does Menger Hold Up Today?

Evidence from Virtual Worlds
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This paper compares recent models concerning the role and emergence of money to Carl Menger's initial accounts by way of an empirical examination of the recent case of the spontaneous emergence of a commonly accepted medium of exchange in the virtual online game known as Path of Exile. I find that with respect to the emergence of money in this modern example, Menger's analysis remains superior in terms of its descriptive and predictive account of the case examined in comparison to Kiyotaki and Wright's more modern, search-theoretic approach.

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