Parrondo's paradox via redistribution of wealth

Parrondo’s paradox via redistribution of wealth∗

In Toral’s games, at each turn one member of an ensemble of N ≥ 2 players is selected at random to play. He plays either game A′, which involves transferring one unit of capital to a second randomly chosen player, or game B, which is an asymmetric game of chance whose rules depend on the player’s current capital, and which is fair or losing. Game A′ is fair (with respect to the ensemble’s total...

Capital Redistribution Brings Wealth by Parrondo’s Paradox

We present new versions of the Parrondo’s paradox by which a losing game can be turned into winning by including a mechanism that allows redistribution of the capital amongst an ensemble of players. This shows that, for this particular class of games, redistribution of the capital is beneficial for everybody. The same conclusion arises when the redistribution goes from the richer players to the...

Capital Redistribution Brings Wealth By Parrondo's Paradox

Analysis of a Model for Wealth Redistribution

This paper provides a detailed analytical investigation of a kinetic model for the redistribution of wealth in a simple economy, which was proposed by Chakrabarti, Chatterjee and Manna. Estimates on the rate of convergence towards the steady state are derived, both for the finite-agent model, found in Monte-Carlo simulations, and the continuous model, corresponding to a homogeneous Boltzmann eq...

Aggregate Implications of Wealth Redistribution: the Case of Inflation

This paper shows that a zero-sum redistribution of wealth within a country can have persistent aggregate effects. Motivated by the case of an unanticipated inflation episode, we consider redistribution shocks that shift resources from old to young households. Aggregate effects arise because there are asymmetries in the reaction of winners and losers to changes in wealth. We focus on two sources...