Twenty-five Years of Random Asset Exchange Modeling

The last 25 years have seen the development of a significant literature within the subfield of econophysics which attempts to model economic inequality as the emergent property of systems of stochastically interacting agents. In this article, the literature surrounding this approach to the study of wealth and income distributions, henceforth the “random asset exchange” literature following the terminology of Sinha (Phys Scr 2003(T106):59, 2003), is thoroughly reviewed for the first time. The foundational papers of Drăgulescu and Yakovenko (Eur Phys J B 17(4):723–729, 2000), Chakraborti and Chakrabarti (Eur Phys J B 17(1):167–170, 2000), and Bouchaud and Mézard (Physica A 282(3):536–545, 2000) are discussed in detail, and principal canonical models within the random asset exchange literature are established. The most common variations upon these canonical models are enumerated and the successes and limitations of such models are discussed. The paper concludes with an argument that the literature should move in the direction of more explicit representations of economic structure and processes to acquire greater explanatory power.