The theory of money assumes decentralized bilateral exchange and excludes centralized multilateral exchange. However, endogenizing the exchange process is critical for understanding the conditions that support the use of money. We develop a “travelling game” to study the spontaneous...

The legal foundation of the monetary system is the law of legal tender. The "legal tender" concept is used in economics textbooks and journals to describe almost anything except for what it really means in actual laws. Such errors mislead students and prevent an accurate evaluation of the...

Monetary search models are difficult to analyze unless the distribution of money holdings is made degenerate. Popular techniques include using an infinitely large household (Shi 1997) and adding a centralized market with quasi-linear utility (Lagos and Wright 2005). Wallace (2002) suggests as an...

The paper re-evaluates the conventional wisdom regarding the existence of moneys that supposedly circulated without any legal status or intrinsic value. Economists call these objects "fiat money." I re-examine the most famous examples of such objects from primitive societies, such as the stone...