Endogenous currency formation in an online environment: The case of Diablo II

Research output: Contribution to journalArticle


This paper presents a case study of the emergence of currency from a barter economy in an online game community. We use this case study to attempt to shed light on the relative importance of various types of frictions that lead to the emergence of money in search-theoretic models of currency formation. In particular, our study highlights the importance of exchange frictions relative to epistemic frictions. Using the records of an online message board dedicated to facilitating trades within the game, we document the emergence of currency and its stability over time.

Original languageEnglish
Pages (from-to)53-66
Number of pages14
JournalReview of Austrian Economics
Issue number1
StatePublished - Mar 1 2016



  • Epistemic frictions
  • Exchange frictions
  • Kiyotaki-Wright
  • Medium of exchange
  • Menger
  • Money emergence
  • Online societies

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