The Rise of Money: An Evolutionary Analysis of the Origins of Money

This paper shows that money as a \u85at medium of exchange arises naturally in complex economies. An economy is complex if the probability of being able to barter is small. We show this by having people learn the value of money in a simple search model. We then allow people to occasionally experiment with new strategies (or mutate). In this model if there are more goods than money in all trading periods then non-convertible \u85at money is evolutionarily dominant (or stochastically stable) if the economy is complex enough