Statistical-physics models for fluctuations and emergent inequality in economic systems

Abstract

The model of V. M. Yakovenko and J. Barkley Rosser shows how maximization of entropy leads to exponential income distributions [Rev. Mod. Phys. 81, 1703.]. The simple agent-based model shows how inequality arises solely based on intrinsic statistical fluctuations. Using basic economic principles, we adapt this model multiple times to incorporate the trade between different types of goods. We find steady-state distributions of goods that are unequal, but different from the exponential distribution Yakovenko found. We examine the results and see that unequal income distributions lead to differences in demand and supply curves, and equilibrium prices, as compared to equal income distributions.