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A new probabilistic analysis of the yard-sale model

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  • Christoph Borgers
  • Claude Greengard

Abstract

In Chakraborti's yard-sale model of an economy, identical agents engage in trades that result in wealth exchanges, but conserve the combined wealth of all agents and each agent's expected wealth. In this model, wealth condensation, that is, convergence to a state in which one agent owns everything and the others own nothing, occurs almost surely. We give a proof of this fact that is much shorter than existing ones and extends to a modified model in which there is a wealth-acquired advantage, i.e., the wealthier of two trading partners is more likely to benefit from the trade.

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  • Christoph Borgers & Claude Greengard, 2023. "A new probabilistic analysis of the yard-sale model," Papers 2308.01485, arXiv.org.
    • Handle: RePEc:arx:papers:2308.01485
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    References listed on IDEAS

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    1. Bruce Boghosian, 2014. "Fokker–Planck description of wealth dynamics and the origin of Pareto's law," International Journal of Modern Physics C (IJMPC), World Scientific Publishing Co. Pte. Ltd., vol. 25(12), pages 1-8.
    2. Chorro, Christophe, 2016. "A simple probabilistic approach of the Yard-Sale model," Statistics & Probability Letters, Elsevier, vol. 112(C), pages 35-40.
    3. Boghosian, Bruce M. & Devitt-Lee, Adrian & Johnson, Merek & Li, Jie & Marcq, Jeremy A. & Wang, Hongyan, 2017. "Oligarchy as a phase transition: The effect of wealth-attained advantage in a Fokker–Planck description of asset exchange," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 476(C), pages 15-37.
    4. Christophe Chorro, 2016. "A simple probabilistic approach of the Yard-Sale model," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01387028, HAL.
    5. Bruce M. Boghosian, 2014. "Fokker-Planck Description of Wealth Dynamics and the Origin of Pareto's Law," Papers 1407.6851, arXiv.org.
    6. Christophe Chorro, 2016. "A simple probabilistic approach of the Yard-Sale model," Post-Print hal-01387028, HAL.
    7. Anirban Chakraborti, 2002. "Distributions Of Money In Model Markets Of Economy," International Journal of Modern Physics C (IJMPC), World Scientific Publishing Co. Pte. Ltd., vol. 13(10), pages 1315-1321.
    8. Francisco Cardoso, Ben-Hur & Gonçalves, Sebastián & Iglesias, José Roberto, 2023. "Why equal opportunities lead to maximum inequality? The wealth condensation paradox generally solved," Chaos, Solitons & Fractals, Elsevier, vol. 168(C).
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    Cited by:

    1. David W. Cohen & Bruce M. Boghosian, 2023. "Bounding the approach to oligarchy in a variant of the yard-sale model," Papers 2310.16098, arXiv.org, revised Apr 2024.

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