Condensed Matter Physics Seminar

Thursday, September 23, 1999, 2 p.m.
Plant Sciences Building, Room 1130

Statistical Mechanics of Money

Victor Yakovenko

(University of Maryland)

Abstract:   A network of agents exchanging money between themselves is studied in order to simulate an economic environment.  In agreement with general laws of statistical mechanics, if the total amount of money is conserved during each transaction and if the number of agents is held constant, the stationary distribution of money among agents is the Gibbs distribution exp(-M/T).  Here M is the money, and T is an effective "temperature'', which is essentially the average amount of money per agent.  As follows from the Boltzmann-equation approach to the problem, deviations from this general result occur only when the time-reversal symmetry of the trading rules is explicitly broken.  The emergence of the Gibbs distribution is verified in computer simulations of various trading rules and models.

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