Agent-based models of financial markets

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Agent-based models of financial markets

Financial markets are the most widely studied examples of economic systems, both at the empirical and the theoretical level. The study of price, supply and demand in these markets reveals interesting empirical observations whose explanation in the framework of standard equilibrium models is a challenge. Representing a financial market as a system of agents with simple behavioral rules leads to ...

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Linking agent-based models and stochastic models of financial markets.

It is well-known that financial asset returns exhibit fat-tailed distributions and long-term memory. These empirical features are the main objectives of modeling efforts using (i) stochastic processes to quantitatively reproduce these features and (ii) agent-based simulations to understand the underlying microscopic interactions. After reviewing selected empirical and theoretical evidence docum...

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Microstructure Dynamics and Agent-Based Financial Markets

One of the essential features of the agent-based financial models is to show how price dynamics is affected by the evolving microstructure. Empirical work on this microstructure dynamics is, however, built upon highly simplified and unrealistic behavioral models of financial agents. Using genetic programming as a rule-inference engine and self-organizing maps as a clustering machine, we are abl...

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Agent-Based Models of Financial Markets: A Comparison with Experimental Markets

We construct a computer simulation of a repeated double-auction market, designed to match those in experimental-market settings with human subjects, to model complex interactions among arti cially-intelligent traders endowed with varying degrees of learning capabilities. In the course of six di erent experimental designs, we investigate a number of features of our agent-based model: the price e...

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Significance of Heterogeneity in Financial Markets: Empirical Studies from Simple Agent-Based Financial Models

The paper is devoted to an econometric study of the simple agent-based financial markets, which are based on the few-type designs. In particular, we study a version of the adaptive belief system (Brock and Hommes, 1998) in the context of fundamentalists-chartist (fundamentalistschartists-contrarians) formulation. The general question which concerns us is the significance of the number of types ...

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ژورنال

عنوان ژورنال: Reports on Progress in Physics

سال: 2007

ISSN: 0034-4885,1361-6633

DOI: 10.1088/0034-4885/70/3/r03