Entropy, Vol. 25, Pages 1236: A Wealth Distribution Agent Model Based on a Few Universal Assumptions (Entropy)

We propose a new agent-based model for studying wealth distribution. We show that a model that links wealth to information (interaction and trade among agents) and to trade advantage is able to qualitatively reproduce real wealth distributions, as well as their evolution over time and equilibrium distributions. These distributions are shown in four scenarios, with two different taxation schemes where, in each scenario, only one of the taxation schemes is applied. In general, the evolving end state is one of extreme wealth concentration, which can be counteracted with an appropriate wealth-based tax. Taxation on annual income alone cannot prevent the evolution towards extreme wealth concentration.