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We study a risk-sharing economy where an arbitrary number of heterogenous agents trades an arbitrary number of risky assets subject to quadratic transaction costs. For linear state dynamics, the forward-backward stochastic differential…
The dynamics of wealth distribution plays a critical role in the economic market, hence an understanding of its nonequilibrium statistical mechanics is of great importance to human society. For this aim, a simple and efficient…
How do individuals accumulate wealth as they interact economically? We outline the consequences of a simple microscopic model in which repeated pairwise exchanges of assets between individuals build the wealth distribution of a population.…
Mounting evidences are being gathered suggesting that income and wealth distribution in various countries or societies follow a robust pattern, close to the Gibbs distribution of energy in an ideal gas in equilibrium, but also deviating…
We review the basic kinetic wealth-exchange models of Angle [J. Angle, Social Forces 65 (1986) 293; J. Math. Sociol. 26 (2002) 217], Bennati [E. Bennati, Rivista Internazionale di Scienze Economiche e Commerciali 35 (1988) 735], Chakraborti…
The key characteristic of a true free market economy is that exchanges are entirely voluntary. When there is a monopoly in the creation of currency as we have in today's markets, you no longer have a true free market. Features of the…
Thomas Piketty's Capital in the Twenty-First Century puts forth a logically consistent explanation for changes in income and wealth inequality patterns. However, while rich in data, the book provides no formal empirical testing for its…
The universal prevalence of cooperation is puzzling, as defection typically yields higher payoffs than cooperation, motivating searches for hidden pathways to cooperation. Here we study a game-theoretic model on a lattice structured…
In this manuscript, we develop and analyze a continuous version of the well-known Bennati-Dragulescu-Yakovenko (BDY) dollar-exchange discrete model. Starting from the conservative BDY exchange mechanism, we rely on kinetic theory for…
In our simplified description `wealth' is money ($m$). A kinetic theory of gas like model of money is investigated where two agents interact (trade) selectively and exchange some amount of money between them so that sum of their money is…
We introduce uncertainty into a pure exchange economy and establish a connection between Shannon's differential entropy and uniqueness of price equilibria. The following conjecture is proposed under the assumption of a uniform probability…
The lattice gas automaton (LGA) is proposed for a closed economic market of agents with heterogeneous saving interests. There are two procedures in the standard LGA, i.e., "propagation" + "transaction". If the propagation step is removed…
At the zero lower bound, the New Keynesian model predicts that output and inflation collapse to implausibly low levels, and that government spending and forward guidance have implausibly large effects. To resolve these anomalies, we…
Using the analogy with inelastic granular gasses we introduce a model for wealth exchange in society. The dynamics is governed by a kinetic equation, which allows for self-similar solutions. The scaling function has a power-law tail, the…
We describe society as a nonequilibrium probabilistic system: N individuals occupy W resource states in it and produce entropy S over definite time periods. Resulting thermodynamics is however unusual because a second entropy, H, measures a…
Asset exchange models (AEMs) provide a physics-inspired framework for studying wealth formation. These models capture wealth distribution dynamics via pairwise money exchanges, yielding steady-state distributions from exponential to…
This paper presents a novel study on gas-like models for economic systems. The interacting agents and the amount of exchanged money at each trade are selected with different levels of randomness, from a purely random way to a more chaotic…
We consider the bilateral trade problem, in which two agents trade a single indivisible item. It is known that the only dominant-strategy truthful mechanism is the fixed-price mechanism: given commonly known distributions of the buyer's…
In this work, we investigate a simple nonequilibrium system with many interconnected, open subsystems, each exchanging a globally conserved resource with an external reserve. The system is represented by a random graph, where nodes…
Economic inequality emerges from the interplay between regional growth-rate differences and the interaction network that couples regions. We propose a minimal income-dynamics model, where heterogeneity is governed by growth-rate…