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The Forbes 400, the Pareto power-law and efficient markets

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  • O. S. Klass
  • O. Biham

    ()

  • M. Levy
  • O. Malcai
  • S. Solomon
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    Abstract

    Statistical regularities at the top end of the wealth distribution in the United States are examined using the Forbes 400 lists of richest Americans, published between 1988 and 2003. It is found that the wealths are distributed according to a power-law (Pareto) distribution. This result is explained using a simple stochastic model of multiple investors that incorporates the efficient market hypothesis as well as the multiplicative nature of financial market fluctuations. Copyright EDP Sciences/Società Italiana di Fisica/Springer-Verlag 2007

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    File URL: http://hdl.handle.net/10.1140/epjb/e2006-00396-1
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    Bibliographic Info

    Article provided by Springer in its journal The European Physical Journal B.

    Volume (Year): 55 (2007)
    Issue (Month): 2 (01)
    Pages: 143-147

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    Handle: RePEc:spr:eurphb:v:55:y:2007:i:2:p:143-147

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    Web page: http://www.springer.com/economics/journal/10051

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    Related research

    Keywords: 89.65.Gh Economics; econophysics; financial markets; business and management; 89.65.-s Social and economic systems; 89.75.Da Systems obeying scaling laws;

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    Cited by:
    1. Jess Benhabib & Alberto Bisin, 2009. "The distribution of wealth and fiscal policy in economies with finitely lived agents," NBER Working Papers 14730, National Bureau of Economic Research, Inc.
    2. Sorin Solomon & Natasa Golo, 2014. "Microeconomic Structure determines Macroeconomic Dynamics. Aoki defeats the Representative Agent," Papers 1401.7496, arXiv.org.
    3. Hisano, Ryohei & Mizuno, Takayuki, 2011. "Sales distribution of consumer electronics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 390(2), pages 309-318.
    4. Tomson Ogwang, 2011. "Power laws in top wealth distributions: evidence from Canada," Empirical Economics, Springer, vol. 41(2), pages 473-486, October.
    5. Ogwang, Tomson, 2013. "Is the wealth of the world’s billionaires Paretian?," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 392(4), pages 757-762.
    6. Michal Brzezinski, 2013. "Do wealth distributions follow power laws? Evidence from "rich lists"," Papers 1304.0212, arXiv.org.
    7. Hawkins, Raymond J. & Aoki, Masanao & Roy Frieden, B., 2010. "Asymmetric information and macroeconomic dynamics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 389(17), pages 3565-3571.
    8. Jess Benhabib & Alberto Bisin & Shenghao Zhu, 2014. "The Wealth Distribution in Bewley Models with Investment Risk," NBER Working Papers 20157, National Bureau of Economic Research, Inc.

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