Emerging collective behavior and local properties of financial dynamics in a public investment game

Roberto da Silva, Ana L.C. Bazzan, Alexandre T. Baraviera and Sílvio R. Dahmen

Physica A: Statistical Mechanics and its Applications, 2006, vol. 371, issue 2, 610-626

Abstract: In this paper we consider a simple model of a society of economic agents, namely a variation of the well known “public investment game”, where each agent can contribute with a discrete quantity, i.e., cooperate to increase the benefits of the group. Interactions take place among nearest neighbors and depend on the motivation level (insider information, economy prospects). The profit is used to update individual motivations. We first explore a deterministic scenario and the existence of fixed points and attractors. We also consider the presence of noise, where profits fluctuate stochastically. In this scenario we analyze the global persistence as a function of time—a measure of the probability that the amount of money of the entire group remains at least equal to its initial value. Our simulations show that this quantity has a power law behavior. We have also performed simulations with a population of heterogeneous agents, including deceivers and conservatives. We show that, although there is no regular pattern regarding the average wealth, robust power laws for persistence do exist and argue that this can be used to characterize the emerging collective behavior. The influence of the motivation updating and the presence of conservatives and deceivers on persistence is also studied. Simulations for the local persistence exploring two different versions of this concept: the probability of a particular agent not going bankrupt (i.e., remaining wealth ⩾0 up to time t) and the probability of a particular agent making more money than he initially had. Different power law behaviors are also observed in these situations.

Keywords: Public investment game; Dynamical systems; Monte Carlo simulations (search for similar items in EconPapers)
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0378437106003943
Full text for ScienceDirect subscribers only. Journal offers the option of making the article available online on Science direct for a fee of $3,000

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:371:y:2006:i:2:p:610-626

DOI: 10.1016/j.physa.2006.03.051

Access Statistics for this article

Physica A: Statistical Mechanics and its Applications is currently edited by K. A. Dawson, J. O. Indekeu, H.E. Stanley and C. Tsallis

More articles in Physica A: Statistical Mechanics and its Applications from Elsevier
Bibliographic data for series maintained by Catherine Liu ().