2007/05/04 by M. Ali Saif, Prashant M. Gade · 1 citation
Economics, Econometrics and Finance · Physics and Astronomy · #Complex Systems and Time Series Analysis #Opinion Dynamics and Social Influence #Theoretical and Computational Physics #q-fin.TR
paper · pdf · doi:10.1016/j.physa.2007.03.058
published as Physica A 384 (2007) 448 · 18 pages and 9 figures
openalex publication_date 2007/05/04 · arxiv created 2009/02/12 · arxiv updated 2009/12/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
We investigate the problem of wealth distribution from the viewpoint of asset exchange. Robust nature of Pareto's law across economies, ideologies and nations suggests that this could be an outcome of trading strategies. However, the simple asset exchange models fail to reproduce this feature. A yardsale(YS) model in which amount put on the bet is a fraction of minimum of the two players leads to condensation of wealth in hands of some agent while theft and fraud(TF) model in which the amount to be exchanged is a fraction of loser's wealth leads to an exponential distribution of wealth. We show that if we allow few agents to follow a different model than others, \it i.e. there are some agents following TF model while rest follow YS model, it leads to distribution with power law tails. Similar effect is observed when one carries out transactions for a fraction of one's wealth using TF model and for the rest YS model is used. We also observe a power law tail in wealth distribution if we allow the agents to follow either of the models with some probability.