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Wealth distribution, Pareto law, and stretched exponential decay of money: Computer simulations analysis of agent-based models

Ekrem Aydiner, Andrey G. Cherstvy and Ralf Metzler

Physica A: Statistical Mechanics and its Applications, 2018, vol. 490, issue C, 278-288

Abstract: We study by Monte Carlo simulations a kinetic exchange trading model for both fixed and distributed saving propensities of the agents and rationalize the person and wealth distributions. We show that the newly introduced wealth distribution – that may be more amenable in certain situations – features a different power-law exponent, particularly for distributed saving propensities of the agents. For open agent-based systems, we analyze the person and wealth distributions and find that the presence of trap agents alters their amplitude, leaving however the scaling exponents nearly unaffected. For an open system, we show that the total wealth – for different trap agent densities and saving propensities of the agents – decreases in time according to the classical Kohlrausch–Williams–Watts stretched exponential law. Interestingly, this decay does not depend on the trap agent density, but rather on saving propensities. The system relaxation for fixed and distributed saving schemes are found to be different.

Keywords: Econophysics; Wealth and income distribution; Pareto law; Scaling exponents (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:phsmap:v:490:y:2018:i:c:p:278-288