A Unified Framework for the Pareto Law and Matthew Effect using Scale-Free Networks

Details A Unified Framework for the Pareto Law and Matthew Effect using Scale-Free Networks A Unified Framework for the Pareto Law and Matthew Effect using Scale-Free Networks

2006-06-09

arxiv.org/abs/physics/0606085v1

Physics

Physics and Society

5 pages, 8 figures

Scientific paper

10.1140/epjb/e2006-00365-8

We investigate the accumulated wealth distribution by adopting evolutionary games taking place on scale-free networks. The system self-organizes to a critical Pareto distribution (1897) of wealth $P(m)\sim m^{-(v+1)}$ with $1.6 < v <2.0$ (which is in agreement with that of U.S. or Japan). Particularly, the agent's personal wealth is proportional to its number of contacts (connectivity), and this leads to the phenomenon that the rich gets richer and the poor gets relatively poorer, which is consistent with the Matthew Effect present in society, economy, science and so on. Though our model is simple, it provides a good representation of cooperation and profit accumulation behavior in economy, and it combines the network theory with econophysics.

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