A new probabilistic analysis of the yard-sale model

Abstract

In Chakraborti's yard-sale model of an economy, identical agents engage in trades that result in wealth exchanges, but conserve the combined wealth of all agents and each agent's expected wealth. In this model, wealth condensation, that is, convergence to a state in which one agent owns everything and the others own nothing, occurs almost surely. We give a proof of this fact that is much shorter than existing ones and extends to a modified model in which there is a wealth-acquired advantage, i.e., the wealthier of two trading partners is more likely to benefit from the trade.