Regensburg 2022 – wissenschaftliches Programm

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SOE: Fachverband Physik sozio-ökonomischer Systeme

SOE 3: Economic Models

SOE 3.2: Vortrag

Montag, 5. September 2022, 10:45–11:00, H11

Games in rigged economies — •Luis F Seoane — Systems Biology Department, Spanish National Center for Biotechnology (CNB-CSIC), C/ Darwin 3, Madrid, Spain.

Modern economies evolved from simpler material exchanges into very convoluted systems. Today, a multitude of aspects can be regulated, tampered with, or left to chance; these are economic degrees of freedom (DOF) which shape the flow of wealth. Economic actors can exploit them, at a cost, and bend that flow in their favor. If intervention becomes widespread, microeconomic strategies can collide or resonate, building into macroeconomic effects. How viable is a *rigged* economy? How do growing economic complexity and wealth affect it? We capture essential elements of rigged economies with a simple model. Nash equilibria in tractable cases show how increased intervention turns economic DOF from minority into majority games through a dynamical phase. This is reproduced by agent-based simulations of our model, which allow us to explore scenarios out of reach for payoff matrices. Increasing economic complexity appears as a mechanism to defuse cartels or consensus situations. But excessive complexity enters abruptly into a regime of large fluctuations (resulting from non-competitive intervention efforts coupled across DOF) that threaten the system's viability. Thus high economic complexity can result in negative spillover from non-competitive actions. Simulations suggest that wealth must grow faster than linearly with complexity to avoid this large fluctuations regime. Our model provides testable conclusions and phenomenological charts to guide policing of rigged economies.