Scaling of wealth distribution in a winner-take-all economic game
Abstract
We present evidence for the emergence of power law that resembles the Pareto scaling in the wealth distribution of a system of betting agents. Each agent plays in a "winner-take-all" game with a uniform betting fraction, φ = 0.50, or 50% of their current income in an initial population size, n of 5000. We found a transition from exponential to power-law wealth distribution as the number of agents playing per iteration is increased.
The phase transition behavior leads to a kind of economic revolution from planned economy to market economy. Wherein, planned economy is governed by a central coordinator and the decisions within the system are designed ahead of time. Likewise, market economy makes use of free market guided by free price system with no central coordinator.
In this paper, we also illustrate the emergence of capitalism by means of the rich-getting richer mechanism.
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