Abstract

This paper presents a computer simulated artificial stock market to examine market rationality issues. We constructeconomicagentswithdifferentdegreesofirrationalitytoparticipateinthestockmarket. Theagents replicate the irrational behaviors described in the psychology and finance literatures and determine the outcome of the market. The main focus of this study is to examine the two contradicting (efficient market versus noise trading) finance hypotheses in the presence of rational and irrational traders.

Share

COinS