Money illusion and coordination failure

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Standard

Money illusion and coordination failure. / Fehr, Ernst; Tyran, Jean-Robert.

I: Games and Economic Behavior, Bind 58, Nr. 2, 2007, s. 246-268.

Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt

Harvard

Fehr, E & Tyran, J-R 2007, 'Money illusion and coordination failure', Games and Economic Behavior, bind 58, nr. 2, s. 246-268. https://doi.org/10.1016/j.geb.2006.04.005

APA

Fehr, E., & Tyran, J-R. (2007). Money illusion and coordination failure. Games and Economic Behavior, 58(2), 246-268. https://doi.org/10.1016/j.geb.2006.04.005

Vancouver

Fehr E, Tyran J-R. Money illusion and coordination failure. Games and Economic Behavior. 2007;58(2):246-268. https://doi.org/10.1016/j.geb.2006.04.005

Author

Fehr, Ernst ; Tyran, Jean-Robert. / Money illusion and coordination failure. I: Games and Economic Behavior. 2007 ; Bind 58, Nr. 2. s. 246-268.

Bibtex

@article{d99249409cb811dbbee902004c4f4f50,
title = "Money illusion and coordination failure",
abstract = "Economists long considered money illusion to be largely irrelevant. Here we show, however, that money illusion has powerful effects on equilibrium selection. If we represent payoffs in nominal terms, choices converge to the Pareto inferior equilibrium; however, if we lift the veil of money by representing payoffs in real terms, the Pareto efficient equilibrium is selected. We also show that strategic uncertainty about the other players' behavior is key for the equilibrium selection effects of money illusion: even though money illusion vanishes over time if subjects are given learning opportunities in the context of an individual optimization problem, powerful and persistent effects of money illusion are found when strategic uncertainty prevails",
keywords = "Faculty of Social Sciences, money illusion, coordination failure, equilibrium selection, coordination games",
author = "Ernst Fehr and Jean-Robert Tyran",
note = "JEL Classification: C9, E32, E52",
year = "2007",
doi = "10.1016/j.geb.2006.04.005",
language = "English",
volume = "58",
pages = "246--268",
journal = "Games and Economic Behavior",
issn = "0899-8256",
publisher = "Academic Press",
number = "2",

}

RIS

TY - JOUR

T1 - Money illusion and coordination failure

AU - Fehr, Ernst

AU - Tyran, Jean-Robert

N1 - JEL Classification: C9, E32, E52

PY - 2007

Y1 - 2007

N2 - Economists long considered money illusion to be largely irrelevant. Here we show, however, that money illusion has powerful effects on equilibrium selection. If we represent payoffs in nominal terms, choices converge to the Pareto inferior equilibrium; however, if we lift the veil of money by representing payoffs in real terms, the Pareto efficient equilibrium is selected. We also show that strategic uncertainty about the other players' behavior is key for the equilibrium selection effects of money illusion: even though money illusion vanishes over time if subjects are given learning opportunities in the context of an individual optimization problem, powerful and persistent effects of money illusion are found when strategic uncertainty prevails

AB - Economists long considered money illusion to be largely irrelevant. Here we show, however, that money illusion has powerful effects on equilibrium selection. If we represent payoffs in nominal terms, choices converge to the Pareto inferior equilibrium; however, if we lift the veil of money by representing payoffs in real terms, the Pareto efficient equilibrium is selected. We also show that strategic uncertainty about the other players' behavior is key for the equilibrium selection effects of money illusion: even though money illusion vanishes over time if subjects are given learning opportunities in the context of an individual optimization problem, powerful and persistent effects of money illusion are found when strategic uncertainty prevails

KW - Faculty of Social Sciences

KW - money illusion

KW - coordination failure

KW - equilibrium selection

KW - coordination games

U2 - 10.1016/j.geb.2006.04.005

DO - 10.1016/j.geb.2006.04.005

M3 - Journal article

VL - 58

SP - 246

EP - 268

JO - Games and Economic Behavior

JF - Games and Economic Behavior

SN - 0899-8256

IS - 2

ER -

ID: 330781