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A herding model with preferential attachment and fragmentation

Author

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  • Rodgers, G.J.
  • Zheng, Dafang

Abstract

We introduce and solve a model that mimics the herding effect in financial markets when groups of agents share information. The number of agents in the model is growing and at each time step either: (i) with probability p an incoming agent joins an existing group, or (ii) with probability 1−p a group is fragmented into individual agents. The group size distribution is found to be power law with an exponent that depends continuously on p. A number of variants of our basic model are discussed. Comparisons are made between these models and other models of herding and random growing networks.

Suggested Citation

  • Rodgers, G.J. & Zheng, Dafang, 2002. "A herding model with preferential attachment and fragmentation," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 308(1), pages 375-380.
    • Handle: RePEc:eee:phsmap:v:308:y:2002:i:1:p:375-380
    DOI: 10.1016/S0378-4371(02)00556-3
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