Leilani Bailey

   Department of Mathematics and Statistics

   University of Nevada, Reno


   An Analysis of a Strategic Market Game Using Gold as Money and Ornament


   Abstract: In Quint-Shubik (2012), the authors present and solve several
   models of a simple economy, the idea being to show how to game
   theoretically model the role of money and financial institutions.  In
   particular, in a chapter entitled "Markets with Gold", a simple
   two-good-plus-gold economy is presented, in which players may use the
   same gold both as a money and as a durable good (jewelry) which
   provides a stream of services.  At any time, the gold is allowed only
   to be used for one of these functions.


   In this thesis we consider a slightly different version of the model.
   There are now two different kinds of gold - a "monetary gold" and a
   "jewelry gold", with a conversion cost between them.  We consider two
   models - one without banking and one with banking.  Using the theory of
   non-linear programming, we solve for Nash equilibrium strategies for
   these models.