Living in an Irrational Society: Wealth Distribution with Correlations between Risk and Expected Profits

M. FUENTES; M. N. KUPERMAN; J. R. IGLEISAS

PHYSICA A - STATISTICAL AND THEORETICAL PHYSICS

ELSEVIER SCIENCE BV

Año: 2006 vol. 371 p. 112 - 117

0378-4371

Different models to study the wealth distribution in an arti.cial society have considered a transactional dynamics as the driving force. Those models include a risk aversion factor, but also a .nite probability of favoring the poorer agent in atransaction. Here, we study the case where the partners in the transaction have a previous knowledge of the winningprobability and adjust their risk aversion taking this information into consideration. The results indicate that a relativelyequalitarian society is obtained when the agents risk in direct proportion to their winning probabilities. However, it is theopposite case that delivers wealth distribution curves and Gini indices closer to empirical data. This indicates that, at leastfor this very simple model, either agents have no knowledge of their winning probabilities, either they exhibit an‘‘irrational’’ behavior risking more than reasonable.