ICES Seminar in Experimental Economics and Game Theory
Back to the Salt Mines: The Continued Debate on the Origin of Money
Friday, April 25, 2025 12:00 PM to 1:00 PM EDT
Vernon Smith Hall (formerly Metropolitan Building), 5183
The ICES Seminar in Experimental Economics and Game Theory of the Spring 2025 semester will feature:
San Jose State University
Back to the Salt Mines: The Continued Debate on the Origin of Money
Abstract
Though there is arguably a consensus among economists that money as a medium of exchange arose out of barter, scholars in many other fields including anthropology, history, and sociology question this origin story. These scholars instead argue that prior to the use of money, central authorities created units of account to track public and private debts and that a medium of exchange signifying these units arose later. However, recent archaeological finds from excavations at Provadia, the first known urban and salt production center in Europe dating to ca 6000 BC, suggest that salt - a good essential to life but lacking in the Neolithic diet - likely emerged as a late stone-age money in long distance trade. As there was no state and leadership even at a local level was fluid, the probability that this was a centralized phenomenon is small.
Unfortunately, no written evidence exists to support this hypothesis, and the physical evidence is only suggestive. In order to shed some light on this conundrum, we develop an agent-based model that combines artificial intelligence, least cost path analysis, money search theory and archaeological data to simulate trading patterns at Provadia. We find that, under a large range of parameter settings, a high demand good such as salt naturally emerges as money, and in line with the archaeological evidence, the producers of this good capture a disproportionate share of economic wealth. We also test our model in a controlled laboratory experiment and the results support our simulations.
.
For more information about the Seminar Series, please visit the Seminar Schedule homepage.
