Theoretical Investigations of Partnership Turnover and of Money

Open Access
Fukai, Hiroki
Graduate Program:
Doctor of Philosophy
Document Type:
Date of Defense:
February 24, 2017
Committee Members:
  • Neil Wallace, Dissertation Advisor
  • Neil Wallace, Committee Chair
  • Russell Cooper, Committee Member
  • Kalyan Chatterjee, Committee Member
  • Anthony Kwasnica, Outside Member
  • partnership
  • turnover
  • money
  • essentiality of money
This dissertation consists of four chapters. The first chapter examines the turnover of multiperiod partnerships. The turnover of multiperiod partnerships such as marriages, labor contracts, and joint ventures varies over time and across countries. A model is set out in which these different observations arise as multiple equilibria. In a random pairwise matching model, players are heterogeneous in time preference and each pair plays a prisoners' dilemma game with random payoffs from mutual cooperation. Two steady states are constructed: in one, non-myopic players cooperate even when a match has low payoffs from mutual cooperation; in the other, they cooperate only when a match has high payoffs from it. Transition dynamics across the two steady states are studied. For a numerical example, it is shown that a transition in either direction is an equilibrium. The last three chapters are contributions to monetary economics. In the second chapter, written jointly with Yu Awaya, a counter-example to the notion that money is memory is provided---one that relies on incomplete information. For it, there exists an implementable allocation with money which is not implementable with memory. The result arises because money conveys only a limited amount of information about past actions which can be beneficial in settings with incomplete information. In the third chapter, I examine a necessary condition for fiat money to be essential. Fiat money, an intrinsically useless object, is said to be essential if some good allocations are achieved with it but not without it. It is shown that imperfect monitoring is necessary for money to be essential in a large class of economic environments. This provides a guide for the construction of models in which monetary trade achieves good outcomes. In the fourth chapter, written jointly with Yu Awaya, it is shown that a seemingly strong condition is not sufficient for money to be essential. Money is thought to be essential when it is difficult to monitor others' behavior. We provide a counterexample to the view. For it, it is shown that even if there is no monitoring, money is inessential---the first best allocation can be attained without money (or any other form of monitoring).