Robot traders can prevent extreme events in complex stock markets

Suhadolnik, Nicolas; Galimberti, Jaqueson and Da Silva, Sergio (2010): Robot traders can prevent extreme events in complex stock markets. Unpublished.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Stock markets; Robot traders; Financial regulation; Econophysics
• Subjects: G - Financial Economics > G1 - General Financial Markets > G18 - Government Policy and Regulation; G - Financial Economics > G0 - General > G01 - Financial Crises

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