# The Microscopic Origin of the Pareto Law and Other Power-Law Distributions

Research output: Chapter in Book/Report/Conference proceeding › Chapter › Scientific › peer-review

### Standard

**The Microscopic Origin of the Pareto Law and Other Power-Law Distributions.** / Patriarca, Marco; Heinsalu, Els; Chakraborti, Anirban; Kaski, Kimmo.

Research output: Chapter in Book/Report/Conference proceeding › Chapter › Scientific › peer-review

### Harvard

*Econophysics and Sociophysics: Recent Progress and Future Directions.*New economic windows, Cham, pp. 159-176, International Workshop Econophys, New Delhi, India, 27/11/2015. https://doi.org/10.1007/978-3-319-47705-3_12

### APA

*Econophysics and Sociophysics: Recent Progress and Future Directions*(pp. 159-176). (New economic windows). Cham. https://doi.org/10.1007/978-3-319-47705-3_12

### Vancouver

### Author

### Bibtex - Download

}

### RIS - Download

TY - CHAP

T1 - The Microscopic Origin of the Pareto Law and Other Power-Law Distributions

AU - Patriarca, Marco

AU - Heinsalu, Els

AU - Chakraborti, Anirban

AU - Kaski, Kimmo

PY - 2017

Y1 - 2017

N2 - Many complex systems are characterized by power-law distributions, beginning with the first historical example of the Pareto law for the wealth distribution in economic systems. In the case of the Pareto law and other instances of power-law distributions, the power-law tail can be explained in the framework of canonical statistical mechanics as a statistical mixture of canonical equilibrium probability densities of heterogeneous subsystems at equilibrium. In this picture, each subsystem interacts (weakly) with the others and is characterized at equilibrium by a canonical distribution, but the distribution associated to the whole set of interacting subsystems can in principle be very different. This phenomenon, which is an example of the possible constructive role of the interplay between heterogeneity and noise, was observed in numerical experiments of Kinetic Exchange Models and presented in the conference “Econophys-Kolkata-I”, hold in Kolkata in 2005. The 2015 edition, taking place ten years later and coinciding with the twentieth anniversary of the 1995 conference hold in Kolkata where the term “Econophysics” was introduced, represents an opportunity for an overview in a historical perspective of this mechanism within the framework of heterogeneous kinetic exchange models (see also Kinetic exchange models as D-dimensional systems in this volume). We also propose a generalized framework, in which both quenched heterogeneity and time dependent parameters can comply constructively leading the system toward a more robust and extended power-law distribution.

AB - Many complex systems are characterized by power-law distributions, beginning with the first historical example of the Pareto law for the wealth distribution in economic systems. In the case of the Pareto law and other instances of power-law distributions, the power-law tail can be explained in the framework of canonical statistical mechanics as a statistical mixture of canonical equilibrium probability densities of heterogeneous subsystems at equilibrium. In this picture, each subsystem interacts (weakly) with the others and is characterized at equilibrium by a canonical distribution, but the distribution associated to the whole set of interacting subsystems can in principle be very different. This phenomenon, which is an example of the possible constructive role of the interplay between heterogeneity and noise, was observed in numerical experiments of Kinetic Exchange Models and presented in the conference “Econophys-Kolkata-I”, hold in Kolkata in 2005. The 2015 edition, taking place ten years later and coinciding with the twentieth anniversary of the 1995 conference hold in Kolkata where the term “Econophysics” was introduced, represents an opportunity for an overview in a historical perspective of this mechanism within the framework of heterogeneous kinetic exchange models (see also Kinetic exchange models as D-dimensional systems in this volume). We also propose a generalized framework, in which both quenched heterogeneity and time dependent parameters can comply constructively leading the system toward a more robust and extended power-law distribution.

U2 - 10.1007/978-3-319-47705-3_12

DO - 10.1007/978-3-319-47705-3_12

M3 - Chapter

SN - 978-3-319-47705-3

T3 - New economic windows

SP - 159

EP - 176

BT - Econophysics and Sociophysics: Recent Progress and Future Directions

A2 - Abergel, Frédéric

A2 - Aoyama, Hideaki

A2 - Chakrabarti, Bikas K.

A2 - Chakraborti, Anirban

A2 - Deo, Nivedita

A2 - Raina, Dhruv

A2 - Vodenska, Irena

CY - Cham

ER -

ID: 16822650