Econophysics, Statistical Mechanics Approach to · HackerPapers discussions

Econophysics, Statistical Mechanics Approach to — mentioned by scottmsul

Sun, 09 Jul 2017 19:29:32 GMT

This kind of simulation results in an exponential distribution, which is fairly equal compared all things considered. In an exponential distribution, most people have roughly the same order of magnitude of wealth (10s to 100s of dollars). In real life, the bottom 99% follow an exponential distribution pretty closely, while the 1% follow a pareto distribution, which is WAY More unequal. The transition is very sharp too, and has been studied in econophysics models. Brief introduction to econophysics for the mathematically inclined: https://arxiv.org/abs/0709.3662

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Econophysics, Statistical Mechanics Approach to — mentioned by scottmsul

Sat, 21 Jan 2017 23:42:52 GMT

I've read a bit into econophysics. In stat mech, the exchange of energy between atoms is assumed to be random. When the exchange of energy is random, the resulting distribution of energies is a Gibbs distribution, which means that the probability of atoms with higher energies falls off exponentially. The application is that if you replace energy with money, and atoms with people, then the same equations hold for a model of people who randomly exchange money. Therefore if investments were truly random, you would expect the distribution of investors' wealth to follow an exponential…

Paper and discussion history. A mention is not an endorsement.