Money and Reciprocity

Based on an experimental analysis of a simple monetary economy we argue that a monetary system is more stable than one would expect from individual rationality. Weshow that positive reciprocity stabilizes the monetary system, provided everyparticipant considers accepting money as a reasonable option. If however someparticipants notoriously refuse to accept money then due to negative reciprocity theirbehavior will eventually induce a break down of the monetary system.