Government intervention model based on behavioral heterogeneity for China’s stock market

Abstract Active government intervention is a striking characteristic of the Chinese stock market. This study develops behavioral heterogeneous agent model (HAM) comprising fundamentalists, chartists, and stabilizers to investigate investors’ dynamic switching mechanisms under intervention. The introduces new player, stabilizer, into HAM as proxy for government. We use examine programs during 2015 China market crash find that it can replicate dynamics investor sentiment asset prices. In addition, our analysis two simulations, specifically data-generating processes shock response analysis, further corroborates key conclusion not only maintains stability but also promotes return risk prices their fundamental values. concludes interventions guided by alleviate dilemma between reducing price volatility improving efficiency in future programs.