Scaling of wealth distribution in a winner-take-all economic game

Authors

Mary Grace Bato National Institute of Physics, University of the Philippines Diliman
Dranreb Earl Juanico National Institute of Physics, University of the Philippines Diliman
Christopher Monterola National Institute of Physics, University of the Philippines Diliman

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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Issue

2006: Proceedings of the 24th Samahang Pisika ng Pilipinas National Physics Congress

Article ID

SPP-2006-PB-30

Section

Poster Session PB

Published

2006-10-25

How to Cite

[1]

MG Bato, DE Juanico, and C Monterola, Scaling of wealth distribution in a winner-take-all economic game, Proceedings of the Samahang Pisika ng Pilipinas 24, SPP-2006-PB-30 (2006). URL: https://proceedings.spp-online.org/article/view/SPP-2006-PB-30.