We apply a commodity-money refinement to matching models in which people meet in pairs and buyers make take-it-or-leave-it offers to sellers. The refinement is applied by attaching a utility value to nominal money and letting that value approach zero. An equilibrium satisfies the refinement if it is such a limit. We show that the refinement eliminates a class of non-full-support steady states.
All Science Journal Classification (ASJC) codes
- Economics and Econometrics