The role of cognitively biased imitators in a small scale agent-based financial market
AbstractWe analyze the consequences of the presence of imitators in a financial market populated by boundedly rational speculators. We consider imitators that only look at the recent success of the available trading rules. We show that the introduction of this kind of imitators makes the results more complicated but even more realistic. In particular, under some specific circumstances, imitators may stabilize an otherwise unstable market or, at the opposite, make unstable an otherwise stable scenario.
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Bibliographic InfoPaper provided by University of Pavia, Department of Economics and Management in its series DEM Working Papers Series with number 029.
Length: 23 pages
Date of creation: Jan 2013
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-01-26 (All new papers)
- NEP-CBE-2013-01-26 (Cognitive & Behavioural Economics)
- NEP-EVO-2013-01-26 (Evolutionary Economics)
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