EXISTENCE AND STABILITY OF CONVENTIONS AND INSTITUTIONS IN A MONETARYECONOMY

The example of money illustrates that the role of history is crucial i n explaining the emergence and persistence of conventions and institut ions. This implies that in analyzing money and monetary institutions t he usefulness of the general equilibrium analysis and game theory, whi ch both draw upon an instrumental concept of rationality, is limited. In our view a fruitful analysis of conventions and institutions has to take account of the importance of historical contingencies and the fu ndamental incompleteness of individual knowledge.