Wealth distribution of simple exchange models coupled with extremal dynamics

TL;DR

This paper investigates how punctuated equilibrium dynamics influence wealth distribution in simple exchange models, revealing phase transitions and more realistic wealth inequality patterns.

Contribution

It introduces and analyzes the effect of punctuated equilibrium as a perturbation in two asset exchange models, highlighting phase transitions and changes in wealth inequality.

Findings

Gini index decreases with perturbation in TF model.

Phase transition at $ ho_c=0.79$ in YS model.

Power law decay observed in wealth distribution for YS.

Abstract

Punctuated Equilibrium (PE) states that after long periods of evolutionary quiescence, species evolution can take place in short time intervals, where sudden differentiation makes new species emerge and some species extinct. In this paper, we introduce and study the effect of punctuated equilibrium on two different asset exchange models: The yard sale model (YS, winner gets a random fraction of a poorer player's wealth) and the theft and fraud model (TF, winner gets a random fraction of the loser's wealth). The resulting wealth distribution is characterized using the Gini index. In order to do this, we consider PE as a perturbation with probability $\rho$ of being applied. We compare the resulting values of the Gini index at different increasing values of $\rho$ in both models. We found that in the case of the TF model, the Gini index reduces as the perturbation $\rho$ increases, not showing dependence with the agents number. While for YS we observe a phase transition which happens around $\rho_c=0.79$. For perturbations $\rho<\rho_c$ the Gini index reaches the value of one as time increases (an extreme wealth condensation state), whereas for perturbations bigger or equal than $\rho_c$ the Gini index becomes different to one, avoiding the system reaches this extreme state. We show that both simple exchange models coupled with PE dynamics give more realistic results. In particular for YS, we observe a power low decay of wealth distribution.