Duality in an asset exchange model for wealth distribution

Jie Li and Bruce M. Boghosian

Physica A: Statistical Mechanics and its Applications, 2018, vol. 497, issue C, 154-165

Abstract: Asset exchange models are agent-based economic models with binary transactions. Previous investigations have augmented these models with mechanisms for wealth redistribution, quantified by a parameter χ, and for trading bias favoring wealthier agents, quantified by a parameter ζ. By deriving and analyzing a Fokker–Planck equation for a particular asset exchange model thus augmented, it has been shown that it exhibits a second-order phase transition at ζ∕χ=1, between regimes with and without partial wealth condensation. In the “subcritical” regime with ζ∕χ<1, all of the wealth is classically distributed; in the “supercritical” regime with ζ∕χ>1, a fraction 1−χ∕ζ of the wealth is condensed. Intuitively, one may associate the supercritical, wealth-condensed regime as reflecting the presence of “oligarchy,” by which we mean that an infinitesimal fraction of the total agents hold a finite fraction of the total wealth in the continuum limit.

Keywords: Fokker–Planck equation; Asset exchange model; Yard-Sale model; Phase transitions; Phase coexistence; Wealth condensation (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:497:y:2018:i:c:p:154-165

DOI: 10.1016/j.physa.2017.12.068

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