Abstract
A model of the distribution of wealth in society will be presented. The model is based on an agent-based Monte Carlo simulation where interaction (exchange of wealth) is allowed along the edges of a small-world network. The interaction is like inelastic scattering and it is characterized by two constants. Simulations of the model show that the distribution behaves as a power-law and it agrees with results of Pareto.
Highlights
Philosophers and scientists in the 19th century started to investigate many natural and social phenomena
The 19th century was a revolutionary era during which the first “natural law” of economics [1] – Pareto’s law was observed
Pareto’s law states that the high end of wealth distribution follows the power-law P(w) ~ w-1-a, where exponent a is stable for an investigated country in a given period of time
Summary
A model of the distribution of wealth in society will be presented. The model is based on an agent-based Monte Carlo simulation where interaction (exchange of wealth) is allowed along the edges of a small-world network. The interaction is like inelastic scattering and it is characterized by two constants.
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