Trejos-Wright with a 2-unit bound: Existence and stability of monetary steady states

Pidong Huang, Yoske Igarashi

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

This paper investigates a Trejos-Wright random matching model of money with a consumer take-it-or-leave-it offer and with individual money holdings in the set {0, 1, 2}. It is shown that three kinds of monetary steady states exist generically: (1) pure-strategy full-support steady states, (2) mixed-strategy full-support steady states, and (3) non-full-support steady states. A full-support steady state exists if and only if a non-full-support steady state exists. Stability of these steady states is also studied. Both pure-strategy and mixed-strategy full-support steady states are locally stable. However, non-full-support steady states are unstable.

Original languageEnglish
Pages (from-to)55-62
Number of pages8
JournalMathematical Social Sciences
Volume73
DOIs
Publication statusPublished - 2015 Jan 1

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ASJC Scopus subject areas

  • Statistics, Probability and Uncertainty
  • Social Sciences(all)
  • Psychology(all)
  • Sociology and Political Science

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