WEALTH DISTRIBUTION EVOLUTION IN AN AGENT-BASED COMPUTATIONAL ECONOMICS

ARTIFICIAL ECONOMICS 2010

Market

Bank

University

State

EnterpriseCustomers

Mass media

Current customers’ wealth

Labor market

Stock market

THE MODEL INTERFACE

MODEL INTERFACE (1 OF 2)

MODEL INTERFACE (2 OF 2)

CUSTOMER

The aim of each customer is to increase its quality of life. The quality of life in the

model consists of wealth and value of utility function corresponding to a customer’s

individual consumption profile.

ENTERPRISE An enterprise is trying to find an optimal volume of output taking into account the balance between total income and total costs. It accomplishes its

investment strategies in an effort to remove the mismatch between demand and supply on the market.

An enterprise has a number of investment strategies at its disposal. Depending on the income got at the current time step, an enterprise takes a decision:

to stop producing unprofitable products; to continue producing increasing/decreasing production volume

within the enterprise’s production capacity;to extend capacity using:

internal funds; bank loan.

If the enterprise’s profit is negative for a certain period of time than an enterprise:

tries to cover its losses using its money reserve;sells a part of its production capacity;is declared bankrupt and leaves the model.

ENTERPRISE INVESTMENT STRATEGY (1 OF 2)

ENTERPRISE INVESTMENT STRATEGY (2 OF 2)

MARKETMarket provides customers with an access to goods produced by enterprises to customers and in such a way keeps the dynamic balance between the aggregate demand and aggregate supply, and forms an equilibrium price on the base of bargaining

BANK organizes money transactions among agents

LABOR MARKET

LABOR MARKET lists vacancies that enterprises possess and send messages about them to the job seekers, and provides equilibrium between

labor demand and supply;

CUSTOMER’S EARNINGS

Customers get their income in forms of salary depending on enterprise production volume and assortment, or redundancy payments from the state, and dividends and profits from stock market operations.

CUSTOMER’S EXPENSES

The volume of the consumed products combination shouldn’t be lower than customer’s survival level. Customer adjusts his level of consumption according to his profits. Current wealth is distributed in the following way: Taxes make up Bh, where - taxes rate, 01;

Current expenses βBh , where β - 0β1; Savings, aimed for requalification or education. Amount, remaining after taxes

paying (1-)Bh. For current expenses β(1-)Bh. Cedu=1-β(1-)Bh remains for education.

ADVERTIZING CAMPAIGN

Customer’s consumption profile before the advertisement

influence..…and afterwards:

Leftovers in the warehouse All the products sold:

CUSTOMER’S WEALTH DISTRIBUTION EVOLUTION (1 OF 2)

To present the results of the research on the modification of the wealth distribution function we examined condition of wealth distribution during the first twelve years of model run with the following initial parameters: 300 customers and 5 enterprises in the model. The following figures show how the wealth distribution changes from the initial period to the twelfth year (624 model time steps). Original wealth distribution

(rectangular)

Wealth distribution one year later(normal)

Wealth distribution six years later(gamma)

CUSTOMER’S WEALTH DISTRIBUTION EVOLUTION (1 OF 2)

Wealth distribution eight years later(normal) Wealth distribution twelve years

later(rectangular)So we can observe the following

steps in the evolution of the wealth distribution: uniform – normal – gamma – normal – uniform. We also found out that a group of customers with a much higher income (5-6 times higher than an average income) and a gap dividing the two groups of customers appear once we set some critical tax level (24%): Wealth distribution with high tax level