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


    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
    Issue number2
    StatePublished - May 1990

    ASJC Scopus subject areas

    • Economics and Econometrics
    • Control and Optimization
    • Applied Mathematics


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