Study of market model describing the contrary behaviors of informed and uninformed agents: Being minority and being majority

Abstract

h i g h l i g h t s• We identified the general classification: vested interests and non-vested interests in competition systems.• We use contrary behaviors: to be minority or majority to model the different characters between the informed and uninformed investors.• We find the periodic fluctuation competition inter-and intra-groups in the dynamic progress.In this paper we analyze the contrary behaviors of the informed investors and uniformed investors, and then construct a competition model with two groups of agents, namely agents who intend to stay in minority and those who intend to stay in majority. We find two kinds of competitions, inter-and intra-groups. The model shows periodic fluctuation feature. The average distribution of strategies illustrates a prominent central peak which is relevant to the peak-fat-tail character of price change distribution in stock markets. Furthermore, in the modified model the tolerance time parameter makes the agents diversified. Finally, we compare the strategies distribution with the price change distribution in real stock market, and we conclude that contrary behavior rules and tolerance time parameter are indeed valid in the description of market model.