Details

In this simulation, a random amount of money in the range [0, ] is transferred from one randomly selected agent to another; if the agent has insufficient funds, the exchange does not take place. To produce smoother results, independent economies are simulated in parallel. The graphs summarize the income distribution and entropy of economies, each with 25 agents. This model of money distribution was first described in a classic paper of the econophysics movement [1].

The complete wealth distribution is characterized by an exponential body (approximately 80% of the population) coupled to a power-law tail (a Pareto distribution, accounting for the wealthiest 20% of the population). A similar agent-based approach, described in [2], replicates the complete wealth distribution, in addition to other empirical regularities of capitalist economies, such as the power-law of firm sizes, the Laplace distribution of firm and GDP growth, etc. These results, and others, suggest that capitalist economies approximate a state of statistical equilibrium.

[1] A. Dragulescu and V. M. Yakovenko, "Statistical Mechanics of Money," The European Physical Journal B, 17(4), 2000 pp. 723–729.

[2] I. Wright, "The Social Architecture of Capitalism," Physica A: Statistical Mechanics and its Applications, 346(3-4), 2005 pp. 589–620.