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Wealth Distributions in Asset Exchange Models

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  • P. L. Krapivsky
  • S. Redner

Abstract

How do individuals accumulate wealth as they interact economically? We outline the consequences of a simple microscopic model in which repeated pairwise exchanges of assets between individuals build the wealth distribution of a population. This distribution is determined for generic exchange rules --- transactions that involve a fixed amount or a fixed fraction of individual wealth, as well as random or greedy exchanges. In greedy multiplicative exchange, a continuously evolving power law wealth distribution arises, a feature that qualitatively mimics empirical observations.

Suggested Citation

  • P. L. Krapivsky & S. Redner, 2010. "Wealth Distributions in Asset Exchange Models," Papers 1006.4595, arXiv.org, revised Aug 2010.
    • Handle: RePEc:arx:papers:1006.4595
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    File URL: http://arxiv.org/pdf/1006.4595
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