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Bhattacharya, P, Chatterjee, A and Chakrabarti, BK (2005)

A common mode of origin of the power law distributions in models of market and earthquake

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Abstract: ABSTRACT: We show that there is a common mode of origin for the power laws observed in two different models: (i) the Pareto law for the distribution of money among the agents with random saving propensities in an ideal gas-like market model and (ii) the Gutenberg-Richter law for the distribution of overlaps in a fractal-overlap model for earthquakes. We find that the power laws appear as the asymptotic forms of ever-widening log-normal distributions for the agents' money and the overlap magnitude respectively. The identification of the generic origin of the power laws helps in better understanding and in developing generalized views of phenomena in such diverse areas as economics and geophysics

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Reference Type: E-Print

Subject Area(s): Applied Mathematics