In decentralized trade individuals self-insure against consumption risk via costly diversification of skills. Although money acts as consumption insurance, it may lead to a moral hazard problem. If the problem is severe, monetizing trade can lower welfare relative to barter.

Can monetizing trade lower welfare? An example

Camera, Gabriele;
2005

Abstract

In decentralized trade individuals self-insure against consumption risk via costly diversification of skills. Although money acts as consumption insurance, it may lead to a moral hazard problem. If the problem is severe, monetizing trade can lower welfare relative to barter.
2005
Camera, Gabriele; Reed, Robert R.*; Waller, Christopher J.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/635746
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