Wealth condensation in a simple model of economy

We introduce a simple model of economy, where the time evolution is described by an equation capturing both exchange between individuals and random speculative trading, in such a way that the fundamental symmetry of the economy under an arbitrary change of monetary units is insured. We investigate a mean-field limit of this equation and show that the distribution of wealth is of the Pareto (power-law) type. The Pareto behaviour of the tails of this distribution appears to be robust for finite range models, as shown using both a mapping to the random `directed polymer' problem, as well as numerical simulations. In this context, a transition between an economy dominated by a few individuals from a situation where the wealth is more evenly spread out, is found. An interesting outcome is that the distribution of wealth tends to be very broadly distributed when exchanges are limited, either in amplitude or topologically. Favoring exchanges (and, less surprisingly, increasing taxes) seems to be an efficient way to reduce inequalities.Comment: 11 pages, 3 .ps figure

Cavity-induced damping and level shifts in a wide aperture spherical resonator

We calculate explicitly the space dependence of the radiative relaxation rates and associated level shifts for a dipole placed in the vicinity of the center of a spherical cavity with a large numerical aperture and a relatively low finesse. In particular, we give simple and useful analytic formulas for these quantities, that can be used with arbitrary mirrors transmissions. The vacuum field in the vicinity of the center of the cavity is actually equivalent to the one obtained in a microcavity, and this scheme allows one to predict significant cavity QED effects.Comment: 28 pages, 5 figures. In v2 some references and appendices adde

Correlation structure of extreme stock returns

It is commonly believed that the correlations between stock returns increase in high volatility periods. We investigate how much of these correlations can be explained within a simple non-Gaussian one-factor description with time independent correlations. Using surrogate data with the true market return as the dominant factor, we show that most of these correlations, measured by a variety of different indicators, can be accounted for. In particular, this one-factor model can explain the level and asymmetry of empirical exceedance correlations. However, more subtle effects require an extension of the one factor model, where the variance and skewness of the residuals also depend on the market return.Comment: Substantial rewriting. Added exceedance correlations, removed some confusing material. To appear in Quantitative Financ