Breakdown of the mean-field approximation in a wealth distribution model

Details Breakdown of the mean-field approximation in a wealth distribution model Breakdown of the mean-field approximation in a wealth distribution model

2008-09-24

arxiv.org/abs/0809.4139v2

Journal of Statistical Mechanics, P02014 (2009)

Economy

Quantitative Finance

Statistical Finance

11 pages, 3 figures

Scientific paper

10.1088/1742-5468/2009/02/P02014

One of the key socioeconomic phenomena to explain is the distribution of wealth. Bouchaud and M\'ezard have proposed an interesting model of economy [Bouchaud and M\'ezard (2000)] based on trade and investments of agents. In the mean-field approximation, the model produces a stationary wealth distribution with a power-law tail. In this paper we examine characteristic time scales of the model and show that for any finite number of agents, the validity of the mean-field result is time-limited and the model in fact has no stationary wealth distribution. Further analysis suggests that for heterogeneous agents, the limitations are even stronger. We conclude with general implications of the presented results.

Affiliated with

Also associated with

No associations

Rating

Breakdown of the mean-field approximation in a wealth distribution model does not yet have a rating. At this time, there are no reviews or comments for this scientific paper.

If you have personal experience with Breakdown of the mean-field approximation in a wealth distribution model, we encourage you to share that experience with our LandOfFree.com community. Your opinion is very important and Breakdown of the mean-field approximation in a wealth distribution model will most certainly appreciate the feedback.

Rate now

Comments { 0 }

Profile ID: LFWR-SCP-O-110896