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Modelling and Simulation in Life and Material Sciences

Stochastic models of an economy

Tijana Radivojevic

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Using the interplay of three simple exchange games, a representation for a conservative economic system is given. The first game mimics the background noise of the economy with pair-wise wealth exchange. The second game mimics taxation and redistribution as a centralized mechanism, in a simplified way, whereas, in the third game, occasional failure of an agent leads to redistribution of its wealth.

These games can be used to investigate the emergence of statistical equilibrium in a simple pure-exchange environment.

The exchange dynamics is shown in the upper part of the video where the wealth of each agent is shown as time goes by.

In the lower part, the relative frequencies of agents with i=1,…,100 coins are shown (wealth distribution). Starting from a Dirac delta in (i = 10) as initial distribution (all the agents had 10 coins at the beginning), the estimated distribution approaches the equilibrium distribution.

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Eusko Jaurlaritza - Gobierno Vasco ikerbasque - Basque Foundation for Science Bizkaia xede. Bizkaiko Foru Aldundia innobasque - Agencia vasca de la innovación Universidad del PaÃŒs Vasco (UPV/EHU)