2025/08/08 by Lautaro Giordano, Giordano, Lautaro, Ignacio Cortés +5 · 1 citation
Economics, Econometrics and Finance · Physics and Astronomy · #Complex Systems and Time Series Analysis #Economic theories and models #FOS: Physical sciences #Opinion Dynamics and Social Influence #Physics and Society (physics.soc-ph) #Statistical Mechanics (cond-mat.stat-mech)
paper · doi:10.48550/arxiv.2508.06650
openalex publication_date 2025/08/08 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
Wealth inequality remains a critical socioeconomic challenge, driven by systemic dynamics and self-reinforcing mechanisms that amplify the economic imbalances. Simplified models from statistical physics provide valuable insights into the fundamental mechanisms governing wealth distribution. In this study, we extend the Yard-Sale model -- a minimal kinetic exchange framework -- to investigate how limiting risk in economic transactions affects inequality. While previous research demonstrates that such models naturally lead to wealth concentration, we introduce a mechanism that restricts the maximum risk agents can assume during exchanges. Numerical simulations reveal that this modification fosters more equitable wealth distributions and significantly reduces extreme disparities. These findings highlight the importance of individual-level constraints in shaping systemic outcomes, offering new perspectives on promoting economic balance.