An Idea Worth its Salt? Experimental Evidence on the Origins of Money in Prehistoric Bulgaria

Does money naturally emerge from barter as our economic textbooks suggest, or is it a ``creature of the state"? Significant historical evidence supports the state theory. However, recent findings from excavations of the prehistoric town of Provadia indicate that salt, a good unique in its high demand during the Neolithic, emerged as a regional medium of exchange in a stateless society. As written evidence is unavailable given the time period in question, we model the regional Provadian economy using a monetary search model guided by anthropological evidence. We then test the behavioral foundations of the model in a controlled laboratory setting with human subjects. Our results support the likelihood that salt spontaneously evolved into money thus substantiating the textbook origin story but raising questions as to the current trajectory of monetary theory