Adaptive networks of trading agents

TL;DR

This paper introduces an adaptive network model where trading agents influence and are influenced by the evolving network structure, resulting in a self-organized critical state with scale-free properties and wealth condensation.

Contribution

It generalizes a previous multi-agent model to include dynamic link formation and removal based on agent wealth, revealing emergent scale-free networks and wealth distribution features.

Findings

The system reaches a critical state with fat-tailed wealth distribution.

Networks become scale-free with fluctuating connectivities.

Heterogeneities promote wealth condensation.

Abstract

Multi-agent models have been used in many contexts to study generic collective behavior. Similarly, complex networks have become very popular because of the diversity of growth rules giving rise to scale-free behavior. Here we study adaptive networks where the agents trade ``wealth'' when they are linked together while links can appear and disappear according to the wealth of the corresponding agents; thus the agents influence the network dynamics and vice-versa. Our framework generalizes a multi-agent model of Bouchand and Mezard, and leads to a steady state with fluctuating connectivities. The system spontaneously self-organizes into a critical state where the wealth distribution has a fat tail and the network is scale-free; in addition, network heterogeneities lead to enhanced wealth condensation.