4.1% 6.7%
10.8% 11.5%
17.4% 16.0%
24.5% 23.3%
43.3% 45.6%
4.1% 6.7%
10.8% 11.5%
17.4% 16.0%
24.5% 23.3%
43.3% 45.6%
4.1% 6.7%
10.8% 11.5%
17.4% 16.0%
24.5% 23.3%
43.3% 45.6%
If you have these two things, you get 80-20 like distributions, you get the explanation for why winners keep winning. If you are interested, you can find my simulation and analysis at
http://www.cs.toronto.edu/~arnold/research/80-20/
Kind of shocking how well this works. The intuition is, why has coke won, well they had some initial advantage, and so they won a bit. Now that they have won a bit, they can finance themselves into more competition. For example, they can place themselves into more stores, into more restaurants etc. Now they get a chance to compete more.
Running the simulation yields interesting results, for example, in the two columns below, the left is Household income in 1970 broken into quintiles. The right column is simulation results.
Interesting how well the top 3 or 4 quintiles match between the simulation and the real world data.
If you run the simulation with different rules, the real world quintiles do not match the simulation quintiles nearly as well. You can tweak the simulation to see this as well.
The simulation can be tweaked to handle cases such as inheritance, so an actor with different ability inherits the wealth of a past actor.
I modified the simulation as follows:
I allowed it to evolve for a single generation, enough time for the top 20% of the population to have 80% of the wealth. I now choose a random sample from the top 20% of the population to follow, lets call them T20.
I now repeatedly
1) pass the wealth of all actors to actors with new, random abilities
2) let the new actors compete for a generation (the same number of competitions we used above)
Result: After 3 generations of steps 1 and 2 above, 80% of T20 has lost almost all their wealth, 10% has lost 75% of their wealth, 10% has done really well, growing it by a factor of 8, due to capable ancestors for three generations.
Amazing, it matches the statistics in https://www.theglobeandmail.com/globe-investor/globe-wealth/...