Note that markets don’t clear though. At low prices, there’s excess demand for nice homes from guests, which has to be rationed (like under rent control). In the model rationing is uniformly at random. Empirically, rationing seems to have strikingly little side-effects on the platform.
Thanks for the question! You can view it as reduced demand for your own home (just like higher labor supply could be seen as lower demand for leisure). Personally, I find the higher supply interpretation more intuitive.
Sadly, I don't know of a nice survey paper on markets with similar token money. Time to write one! Maybe closest to what you are looking for is this MD handbook chapter, maybe also the old Krugman post. But could be easy enough to just talk a bit about home exchanges :)
www.nber.org/system/files...
Absolutely! It’s a beautiful old idea. Smartphone apps have made it even easier to do time banking and other exchange systems than in the 70s
I'm very grateful for the help of my fantastic supervisors (Olivier Tercieux and @liamwrenlewis.bsky.social ) and to the platform for sharing the amazing dataset!
📄 Full paper: www.dropbox.com/scl/fi/dykth...
🌐 Website: julius-goedde.github.io
#EconSky #EconJobMarket #JMP
17/🧵
💡 Takeaways
1. Lessons from traditional markets may not easily extend to token economies
2. Market designs without real money can have advantages even in settings where money is common => exciting opportunities for more MD research 👏
16/🧵
Evidence, in line with different expectations: Using a proxy for personal residences (single listing & < 10 reviews/year), 97% of exchange platform listings are real homes, but only ~10% of Airbnb guest ratings involve plausibly personal residences, others are quasi-professional!
15/🧵
Why do people stick to the house exchange platform, even with worse terms of trade?
🤝 Exchange guests likely behave better – everyone has hosted themselves & knows the effort involved.
Guests expect a personal, not hotel-like experience. It's about respect & connection!
14/🧵
Shouldn’t users with nice homes leave for Airbnb? If it was just about money, they should!
Hedonic ML model + scraped Airbnb data => Most users with fancy homes could make >500$ “for free” by doing same hosting/visiting combo on Airbnb (host 1x & visit comparable house 1x)
13/🧵
Wait…. but doesn’t rationing have side effects⁉️ Turns out, not here. The big price drop did not increase misallocation (actually, it slightly improved the match between home size and guest party size) and did not reduce affected hosts’ effort nor their participation! 😮
12/🧵
Test prediction 2️⃣:
Exploit a big reform of pricing algorithm in a Diff-in-Diff event-study. Many fancy homes became much cheaper (>30%), others didn’t change much. The lower prices increased the supply of nice homes ❗ (usually, we’d think rent control reduces supply). Prediction 2 confirmed ✔️
11/🧵
Sounds like a funny theory?
With the super detailed data I show that the same user hosts 5x less even at moderately high token wealth (enough for 30 nights in a nice home) compared to low wealth. People quickly become satiated with token money!
Prediction 1️⃣ confirmed ✔️
10/🧵
💡 Intuition: Each person can only go on so many vacations. If my nice home earns a lot per booking, I’ll quickly have enough tokens for my own visits and stop hosting, because I can’t spend tokens on anything but visits. With lower prices, I need to host more often!
9/🧵
The model has 2 key predictions
1️⃣ Lower prices can increase the supply of nice homes
2️⃣ That happens when income effects are very strong
In this case, rationing also increases utilitarian welfare
8/🧵
Platform decides how many tokens to pay for big/nice vs. small/plain home. Should they clear the market as usual?
I develop a stylized model of exchange economy to guide the empirical analysis
✔️ endogenous budgets & supply
I Compare competitive equilibrium to rationing (think rent control)
7/🧵
Study big online platform where 100,000+ homes are traded each year with token money.
🤩 Company gave me full database: every transaction & request over 10+ years
Surprisingly, I show there are more personal (not professional) family homes listed here than on Airbnb
6/🧵
This paper
1️⃣ With endogenous budgets & supply, pricing with tokens doesn’t work as in normal markets: Price controls & rationing can increase supply!
2️⃣ Many people strongly prefer token money, choosing it although they would be financially better off on for-money platforms
5/🧵
Literature so far:
- Proposes token money only when 💵 repugnant (oversubscribed classes, food donations)
- sets goods’ prices (in tokens) to clear markets
- only studied allocation problems (supply & token budgets exogenous) but not exchange economies
4/🧵
Some real-world examples
🏡 Home exchanges: Host in your home to earn tokens, spend tokens to stay elsewhere
👶 Baby-sitting co-ops: babysit others’ kids to earn tokens, pay others to babysit yours
🏦 @FeedingAmerica, foodbanks bid tokens on national food donations
👩🎓 @_Coursematch (@ebudish)
…
3/🧵
What is token money? A specialized, single-purpose currency.
🪙 You spend tokens on services within the community, no outside use.
🪙 Often, you need to earn tokens by contributing (e.g. babysitting, hosting guests, trade books, ...)
🪙 Can't buy/sell tokens for real money
2/🧵
1/🧵
Popularity of token money is ⬆️ to allocate class seats, food donations, holiday homes, …
My #JMP asks
1️⃣Does price-setting with tokens work as in normal markets?
2️⃣Can token money have advantages even when using real money is possible?
Surprising answers: NO, YES!
#EconJobMarket #EconSky
