Business Intelligence

Transition From Exponential To Power Law Distributions In A Chaotic Market

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Executive Summary

Economy is demanding new models, able to understand and predict the evolution of markets. To this respect, Econophysics offers models of markets as complex systems that try to comprehend macro-, system-wide states of the economy from the interaction of many agents at micro-level. One of these models is the gas-like model for trading markets. This tries to predict money distributions in closed economies and quite simply, obtains the ones observed in real economies. However, it reveals technical hitches to explain the power law distribution, observed in individuals with high incomes.

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