Eur. Phys. J. B 55, 143-147 (2007)
https://doi.org/10.1140/epjb/e2006-00396-1

The Forbes 400, the Pareto power-law and efficient markets

¹ Racah Institute of Physics, The Hebrew University, Jerusalem, 91904, Israel
² School of Business Administration, The Hebrew University, Jerusalem, 91905, Israel

Corresponding author: ^a biham@phys.huji.ac.il

Received: 10 March 2006
Revised: 15 September 2006
Published online: 27 October 2006

Abstract

Statistical regularities at the top end of the wealth distribution in the United States are examined using the Forbes 400 lists of richest Americans, published between 1988 and 2003. It is found that the wealths are distributed according to a power-law (Pareto) distribution. This result is explained using a simple stochastic model of multiple investors that incorporates the efficient market hypothesis as well as the multiplicative nature of financial market fluctuations.