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

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  • Ekrem Aydiner

    (Istanbul University)

  • Andrey G. Cherstvy

    (Institute for Physics & Astronomy, University of Potsdam)

  • Ralf Metzler

    (Institute for Physics & Astronomy, University of Potsdam)

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. Graphical abstract

Suggested Citation

  • Ekrem Aydiner & Andrey G. Cherstvy & Ralf Metzler, 2019. "Money distribution in agent-based models with position-exchange dynamics: the Pareto paradigm revisited," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 92(5), pages 1-4, May.
    • Handle: RePEc:spr:eurphb:v:92:y:2019:i:5:d:10.1140_epjb_e2019-90674-0
    DOI: 10.1140/epjb/e2019-90674-0
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    References listed on IDEAS

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    1. Chakrabarti,Bikas K. & Chakraborti,Anirban & Chakravarty,Satya R. & Chatterjee,Arnab, 2013. "Econophysics of Income and Wealth Distributions," Cambridge Books, Cambridge University Press, number 9781107013445.
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    Cited by:

    1. Grachev, Gennady A., 2022. "Size distribution of states, counties, and cities in the USA: New inequality form information," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 592(C).
    2. Viktor Stojkoski & Petar Jolakoski & Arnab Pal & Trifce Sandev & Ljupco Kocarev & Ralf Metzler, 2021. "Income inequality and mobility in geometric Brownian motion with stochastic resetting: theoretical results and empirical evidence of non-ergodicity," Papers 2109.01822, arXiv.org.
    3. Jolakoski, Petar & Pal, Arnab & Sandev, Trifce & Kocarev, Ljupco & Metzler, Ralf & Stojkoski, Viktor, 2023. "A first passage under resetting approach to income dynamics," Chaos, Solitons & Fractals, Elsevier, vol. 175(P1).
    4. Petar Jolakoski & Arnab Pal & Trifce Sandev & Ljupco Kocarev & Ralf Metzler & Viktor Stojkoski, 2022. "The fate of the American dream: A first passage under resetting approach to income dynamics," Papers 2212.13176, arXiv.org.
    5. Tian, Songtao & Liu, Zhirong, 2020. "Emergence of income inequality: Origin, distribution and possible policies," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 537(C).

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