A Simulation Experiment Study On Herd Behavior Of Equity-crowdfunding Investors

As a new model of internet finance,Crowdfunding develops rapidly in China in recent years.And carry out experiment of equity-crowdfunding was written into the government work report in 2015.In March 16 th,2016,Crowdfunding was formally incorporated into the National Plan for 13 th Five-Year.According to statistics of 01 Institute Data Center,the financing scale has reached more than 4.5 billion yuan through equity-crowdfunding platforms by the end of the first half of 2015,which benefited approximately 9 million small enterprises and start-ups,shows its broad prospects for development.However,due to asymmetric information and other issues,it's easy for common investors to blindly follow the trend of behavior in the process of equity-crowdfunding.In this paper,from the perspective of computational l finance,we construct a Multi-agent simulation model based on information interaction by NetLogo 5.3.1 to study herd behavior of equity-crowdfunding investors.These two experiments suggest that:Firstly,because of information asymmetry,the information interaction between equity-crowdfunding investors will lead to the majority of later investors choose to invest the project which had more early investors.This herd behavior may result in the project finish the financing target quickly ahead of time,which may have nothing to do with the basic quality of the project,and ultimately make the public investors suffer heavy losses.Secondly,the reduction of the number of early investors or the improvement of the degree of later investor's confidence will reduce the seriousness of herd behavior,but the increase of interaction between investors will have an inverted U-shaped impact on the trend of herd investment.Thirdly,lead-investor mechanism isn't a recipe and permanent solution which was adapt by many equity-crowdfunding platforms.In the process of equity-crowdfunding investment,the positive attitude or high credible investment decision information of lead-investor,may aggravate the herd investment tendency of common public investors.In order to avoid suboptimal results of herd behavior,and protect the healthy development of equity-crowdfunding,regulators and crowdfunding industry should take a combined of measures to improve education system for investors,disclose information appropriately and mandatorily,weaken lead-investor mechanism,and strengthen the supervision of crowdfunding platforms etc.