Money Distributions in Chaotic Economies

TL;DR

This paper introduces a chaotic element into a gas-like economic model, demonstrating that chaos can replicate real-world wealth distributions such as Gamma, Exponential, and Pareto, offering a more realistic simulation of market dynamics.

Contribution

It innovatively incorporates chaotic signals into a traditional gas-like trading model to better emulate actual economic transaction patterns.

Findings

Chaotic market model reproduces real wealth distributions.

Chaos breaks symmetry and influences wealth dynamics.

Model aligns with observed economic data.

Abstract

This paper considers the ideal gas-like model of trading markets, where each individual is identified as a gas molecule that interacts with others trading in elastic or money-conservative collisions. Traditionally this model introduces different rules of random selection and exchange between pair agents. Real economic transactions are complex but obviously non-random. Consequently, unlike this traditional model, this work implements chaotic elements in the evolution of an economic system. In particular, we use a chaotic signal that breaks the natural pairing symmetry $(i,j)\Leftrightarrow(j,i)$ of a random gas-like model. As a result of that, it is found that a chaotic market like this can reproduce the referenced wealth distributions observed in real economies (the Gamma, Exponential and Pareto distributions).