Study of the Wealth Inequality in the Minority Game

Details Study of the Wealth Inequality in the Minority Game Study of the Wealth Inequality in the Minority Game

2004-02-16

arxiv.org/abs/cond-mat/0402411v3

Physics

Condensed Matter

Statistical Mechanics

9 pages in revtex 4 style with 3 figures; minor revision with a change of title; to appear in PRE

Scientific paper

10.1103/PhysRevE.70.066110

To demonstrate the usefulness of physical approaches for the study of realistic economic systems, we investigate the inequality of players' wealth in one of the most extensively studied econophysical models, namely, the minority game (MG). We gauge the wealth inequality of players in the MG by a well-known measure in economics known as the modified Gini index. From our numerical results, we conclude that the wealth inequality in the MG is very severe near the point of maximum cooperation among players, where the diversity of the strategy space is approximately equal to the number of strategies at play. In other words, the optimal cooperation between players comes hand in hand with severe wealth inequality. We also show that our numerical results in the asymmetric phase of the MG can be reproduced semi-analytically using a replica method.

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