When there is broad agreement as to an asset’s fair value, trading volume falls. This value is subsequently used to arrive at the decision how much of its remaining cash budget or stock portfolio to invest or divest. 1.12 In this paper, we introduce the artificial stock market SimStockExchange™ (from here on “SSE”) by outlining the main design of this model. These Third Party views and opinions may be subject to change at any time based on market and other conditions. That is, an agent weighs the deviation of the current market price from the expected price for the next period by the current market price.

The latter structures assume rational agents who make optimal investment decisions and have rational expectations about future developments (Hommes 2006). This can be explained from the fact, that the news generation process in the SSE currently is based on a normal distribution. In the SSE, different types of investors exist who conduct transactions based on the investment rules that are formalized for each type. The information on this page should not be viewed as a recommendation by Fidelity for or against any stock or sector. Moreover, we report on a number of simulation experiments and a first comparison is made between the results of the SSE and those of real stock markets.

Moreover, more (technical) details on how the empirical findings are incorporated in the artificial stock market will be presented there. Anyone at a serious level of wealth, the thinking goes, needs the equivalent of a luxury sedan, with strategic stock choices, hedge funds, private equity, real estate. The expectation of the next period’s price is based on news that enters the market. The FirstRain research engine finds and analyzes the latest information on companies, their market and the business trends impacting the financial markets. Stocks plummeted in a flashback to the panicked trading of 2008 as investors registered deep fears about the European debt crisis.