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Robot traders can prevent extreme events in complex stock markets

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Author Info

  • Suhadolnik, Nicolas
  • Galimberti, Jaqueson
  • Da Silva, Sergio

Abstract

If stock markets are complex, monetary policy and even financial regulation may be useless to prevent bubbles and crashes. Here, we suggest the use of robot traders as an anti-bubble decoy. To make our case, we put forward a new stochastic cellular automata model that generates an emergent stock price dynamics as a result of the interaction between traders. After introducing socially integrated robot traders, the stock price dynamics can be controlled, so as to make the market more Gaussian.

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File URL: http://www.sciencedirect.com/science/article/pii/S0378437110006527
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Bibliographic Info

Article provided by Elsevier in its journal Physica A: Statistical Mechanics and its Applications.

Volume (Year): 389 (2010)
Issue (Month): 22 ()
Pages: 5182-5192

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Handle: RePEc:eee:phsmap:v:389:y:2010:i:22:p:5182-5192

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Web page: http://www.journals.elsevier.com/physica-a-statistical-mechpplications/

Related research

Keywords: Stock markets; Robot traders; Financial regulation; Econophysics;

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Cited by:
  1. Da Silva, Sergio, 2013. "Time to abandon group thinking in economics," MPRA Paper 45660, University Library of Munich, Germany.

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