Accession Number : AD0738104

Title :   A Theory of Money, Prices and the Rate of Interest. Part II. Fiat Money and Noncooperative Equilibrium in a Closed Economy,

Corporate Author : RAND CORP SANTA MONICA CALIF

Personal Author(s) : Shubik,M.

Report Date : AUG 1971

Pagination or Media Count : 63

Abstract : Fiat money is a type of paper or symbol with which any individual may buy most things by law. It has virtually no intrinsic value but immediately assumes a trading value when its shortage can prevent trades that would have been deemed profitable in a nonmonetary competitive equilibrium system. The paper sketches an approach to a theory of fiat money by investigating the properties of a noncooperative trading game embedded within a closed economic system. The game is not a c-game as the individuals must trade via the market. Among its conclusions are that inflation and deflation are not symmetric, and that it is not possible to define a noncooperative game involving borrowing w ithout specifying 'rules of borrowing' or a bankruptcy law. (Author)

Descriptors :   (*MONEY, THEORY), GAME THEORY, ECONOMICS, COSTS

Subject Categories : Economics and Cost Analysis

Distribution Statement : APPROVED FOR PUBLIC RELEASE