The Role of Liquidity Individuals in the Decision-Making

Steinbacher, Matjaz (2009): The Role of Liquidity Individuals in the Decision-Making.

Abstract

We simulate social network games of a portfolio selection to analyze the role of liquidity individuals for the developments in individuals’ decision-making in financial markets. Liquidity individuals prove to be a significant element in the decision-making process of the entire network, as they keep the information of non-dominant strategies alive. Their role is especially significant under omniscient individuals, whereas a little less under non-omniscient individuals. As long as individuals do not lose the information of all the alternatives, their role is insignificant.

• Item Type: MPRA Paper
• Language: English
• Keywords: social networks, portfolio analysis, stochastic finance
• Subjects: G - Financial Economics > G1 - General Financial Markets > G11 - Portfolio Choice ; Investment Decisions; Z - Other Special Topics > Z1 - Cultural Economics ; Economic Sociology ; Economic Anthropology > Z13 - Economic Sociology ; Economic Anthropology ; Social and Economic Stratification; C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C73 - Stochastic and Dynamic Games ; Evolutionary Games ; Repeated Games

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