Examining the Myth of Money with Agent-Based Modelling

Abstract

This chapter presents an agent-based computational model of the emergence of money. It is based on classical economic theories of money, advocating that money is a symbol of credibility. The most interesting and mysterious feature of money is a departure of its face value from its intrinsic value. People accept and appreciate a piece of paper because it is believed as money. The model examines how such belief creates money in a society. Further more, by incorporating spatial activities of agents into the simulations, the model can examine various hypotheses which were difficult to be examined in previous approaches. The simulation results show that parameters such as credibility and communication between agents will affect the outcomes. The model not only provides the foundation for more generalized theory of money, but also demonstrates that agent-based modeling can be an effective tool to examine various hypotheses of social sciences.