Robot traders can prevent extreme events in complex stock markets

Nicolas Suhadolnik, Jaqueson Galimberti, Sergio Da Silva

Research output: Contribution to journalArticlepeer-review

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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. © 2010 Elsevier B.V. All rights reserved.
Original languageEnglish
Pages (from-to)5182-5192
Number of pages10
JournalPhysica A: Statistical Mechanics and its Applications
Volume389
Issue number22
DOIs
Publication statusPublished - 15 Dec 2010

Keywords

  • Econophysics
  • Financial regulation
  • Robot traders
  • Stock markets

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