A unified framework for the Pareto law and matthew effect using scale-free networks

DOI10.1140/EPJB/E2006-00365-8MaRDI QIDQ978906zbMATH OpenOpenAlexFDO

Authors Mao-Bin Hu, Wen-Xu Wang, Rui Jiang, Qing-Song Wu, Bing-Hong Wang, Yonghong Wu

Publication date 25 June 2010

Published in The European Physical Journal B. Condensed Matter and Complex Systems (Search for Journal in Brave)

Full work available at URL https://arxiv.org/abs/physics/0606085

Mathematics Subject Classification ID

Social networks; opinion dynamics (91D30) Applications of statistical and quantum mechanics to economics (econophysics) (91B80)

Abstract: We investigate the accumulated wealth distribution by adopting evolutionary games taking place on scale-free networks. The system self-organizes to a critical Pareto distribution (1897) of wealth $P(m)sim{m}^{-(v+1)}$ with $1.6<v<2.0$ (which is in agreement with that of U.S. or Japan). Particularly, the agent's personal wealth is proportional to its number of contacts (connectivity), and this leads to the phenomenon that the rich gets richer and the poor gets relatively poorer, which is consistent with the Matthew Effect present in society, economy, science and so on. Though our model is simple, it provides a good representation of cooperation and profit accumulation behavior in economy, and it combines the network theory with econophysics.

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Cites work

• Collective dynamics of `small-world' networks
• Emergence of Scaling in Random Networks
• Exponential and power-law probability distributions of wealth and income in the United Kingdom and the United States
• Growth and fluctuations of personal income
• Statistical mechanics of complex networks
• The circulation of money and holding time distribution
• Transfer potentials shape and equilibrate monetary systems

Cited in

(2)

• Phase transition in the rich-get-richer mechanism due to finite-size effects
• When do Matthew effects occur?

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