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Open AccessArticle

A Simple Mechanism Causing Wealth Concentration

1
M. Smoluchowski Institute of Physics, Jagiellonian University, ojasiewicza 11, 30-348 Kraków, Poland
2
Department of Financial Markets, Cracow University of Economics, Rakowicka 27, 31-510 Kraków, Poland
*
Author to whom correspondence should be addressed.
Entropy 2020, 22(10), 1148; https://doi.org/10.3390/e22101148
Received: 1 September 2020 / Revised: 20 September 2020 / Accepted: 8 October 2020 / Published: 13 October 2020
(This article belongs to the Special Issue Complexity in Economic and Social Systems)
We study mechanisms leading to wealth condensation. As a natural starting point, our model adopts a neoclassical point of view, i.e., we completely ignore work, production, and productive relations, and focus only on bilateral link between two randomly selected agents. We propose a simple matching process with deterministic trading rules and random selection of trading agents. Furthermore, we also neglect the internal characteristic of traded goods and analyse only the relative wealth changes of each agent. This is often the case in financial markets, where a traded good is money itself in various forms and various maturities. We assume that agents trade according to the rules of utility and decision theories. Agents possess incomplete knowledge about market conditions, but the market is in equilibrium. We show that these relatively frugal assumptions naturally lead to a wealth condensation. Moreover, we discuss the role of wealth redistribution in such a model. View Full-Text
Keywords: wealth condensation; agent-based computational economics; bargaining; gain function wealth condensation; agent-based computational economics; bargaining; gain function
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MDPI and ACS Style

Cieśla, M.; Snarska, M. A Simple Mechanism Causing Wealth Concentration. Entropy 2020, 22, 1148. https://doi.org/10.3390/e22101148

AMA Style

Cieśla M, Snarska M. A Simple Mechanism Causing Wealth Concentration. Entropy. 2020; 22(10):1148. https://doi.org/10.3390/e22101148

Chicago/Turabian Style

Cieśla, Michał; Snarska, Małgorzata. 2020. "A Simple Mechanism Causing Wealth Concentration" Entropy 22, no. 10: 1148. https://doi.org/10.3390/e22101148

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