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Power law distribution of wealth in population based on a modified Equíluz-Zimmermann model
Yan-Bo Xie1, Bing-Hong Wang, Bo Hu
1Department of Modern Physics and The Nonlinear Science Center, University of Science and Technology of China, Hefei 230026, China.
Abstract:
We propose a money-based model for the power law distribution (PLD) of wealth in an economically interacting population. It is introduced as a modification of the Equíluz and Zimmermann (EZ) model for crowding and information transmission in financial markets. Still, it must be stressed that in the EZ model a PLD without exponential correction is obtained only for a particular parameter, while our pattern will give the exact PLD within a wide range. The PLD exponent depends on the model parameters in a non-trivial way and is exactly calculated in this paper. The numerical results are in excellent agreement with the analytic prediction, and also comparable with empirical data of wealth distribution.
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