Emergent organization in a model market

Avinash Chand Yadav, Kaustubh Manchanda and Ramakrishna Ramaswamy

Physica A: Statistical Mechanics and its Applications, 2017, vol. 482, issue C, 118-126

Abstract: We study the collective behaviour of interacting agents in a simple model of market economics that was originally introduced by Nørrelykke and Bak. A general theoretical framework for interacting traders on an arbitrary network is presented, with the interaction consisting of buying (namely consumption) and selling (namely production) of commodities. Extremal dynamics is introduced by having the agent with least profit in the market readjust prices, causing the market to self-organize. In addition to examining this model market on regular lattices in two-dimensions, we also study the cases of random complex networks both with and without community structures. Fluctuations in an activity signal exhibit properties that are characteristic of avalanches observed in models of self-organized criticality, and these can be described by power–law distributions when the system is in the critical state.

Keywords: Econophysics; Self-organized criticality; Complex system; Random network; Avalanches; Scale-invariant features (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:482:y:2017:i:c:p:118-126

DOI: 10.1016/j.physa.2017.04.029

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