Abstract
We study the finite-size effects in some scaling systems, and show that the finite number of agents N leads to a cut-off in the upper value of the Pareto law for the relative individual wealth. The exponent α of the Pareto law obtained in stochastic multiplicative market models is crucially affected by the fact that N is always finite in real systems. We show that any finite value of N leads to properties which can differ crucially from the naive theoretical results obtained by assuming an infinite N. In particular, finite N may cause in the absence of an appropriate social policy extreme wealth inequality α < 1 and market instability.
Original language | English |
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Pages (from-to) | 503-513 |
Number of pages | 11 |
Journal | Physica A: Statistical Mechanics and its Applications |
Volume | 294 |
Issue number | 3-4 |
DOIs | |
State | Published - 15 May 2001 |
Keywords
- Cut-off
- Finite-size effect
- Multiplicative process
- Power law