Money distribution in agent-based models with position-exchange dynamics: the Pareto paradigm revisited

Aydiner E., Cherstvy A. G., Metzler R.

EUROPEAN PHYSICAL JOURNAL B, vol.92, 2019 (SCI-Expanded) identifier identifier

  • Publication Type: Article / Article
  • Volume: 92
  • Publication Date: 2019
  • Doi Number: 10.1140/epjb/e2019-90674-0
  • Journal Name: EUROPEAN PHYSICAL JOURNAL B
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Scopus
  • Keywords: Statistical and Nonlinear Physics, STATISTICAL-MECHANICS, WEALTH DISTRIBUTION, SAVING PROPENSITY, ASSET EXCHANGE, INCOME, LAW, ECONOPHYSICS, MARKETS
  • Istanbul University Affiliated: Yes

Abstract

Wealth and income distributions are known to feature country-specific Pareto exponents for their long power-law tails. To propose a rationale for this, we introduce an agent-based dynamic model and use Monte Carlo simulations to unveil the wealth distributions in closed and open economical systems. The standard money-exchange scenario is supplemented with the position-exchange agent dynamics that vitally affects the Pareto law. Specifically, in closed systems with position-exchange dynamics the power law changes to an exponential shape, while for open systems with traps the Pareto law remains valid.