Modeling And Simulation Research Of Herd Behavior In Stock Market Based On Small-world Network

The stock market is a complex system with many participants interacting and competing with each other.As one of the core elements of the stock market,investors are represented by a large number of participants and different in performance.They have different information gathering ability,financial ability and trading strategy preference,interacting with each other,both competition and cooperation.When need to make a decision,the bounded rational stock market investors easy to associate investment groups convergence.A large number of studies have shown that followers and imitations between stock market investors are the key factors that lead to market price volatility and exacerbate market risk.Therefore,the inherent relationship between the complex behavior of investors and the volatility of stock market has been paid more attention by the academic and regulatory departments,and systematically studied the evolution of the herd behavior in the stock market,aims to enhance the supervision ability and promote the sustained and stable development of the stock market.This thesis takes the herding behavior of individual investors with low degree of rationality in the market as study subject,and analyses the relationship between stock market investors and small world network structure,and researches the effect of small world network on the investment decision conformity behavior of individual investors.This paper analyzes the evolution features of the herd behavior of investors based on the small world network effect by constructing a stock market conformity model of small world network.The results indicate there inevitably is an equilibrium on herd behavior of investors in stock market,and the evolution feature of herd behavior is affected by the level of the investors rational investment,network group effect,related network structure and so on.If one kind investment behavior in a group is in dominant place,there will be more and more investors making corresponding choices,and if network connectivity is smaller,and the heterogeneous is weaker,the investors'herding behavior will be more easier to formed,which reflects the intrinsic mechanism of stock market investors in small world network group effect and the investment behavior convergence.By analyzing the effect model of stock market investors' herd behavior,the market performance of herd behavior is simulated and analyzed.It is found that the herd behavior of investors enhances the activity of market transactions and increases market volatility.Furthermore,through the analysis on the influence factors of herd behavior we found that investors' herd and imitation behavior is not blind,but they will rely more on the of rational investors with good market performance,and if the relationship between them is closer,the effect will be greater.Therefore,investors with rational judgement are the backbone of the stock market,and they play an important role in maintaining the stability of the stock market.The model and simulation results in thesis reflect the main factors of the change of stock market investors' investment behavior in a certain extent.The inherent law on the evolution of stock market conformity behavior is explained,which can help investors to understand the contribution of information correlation network to the overflow of investment income,improve their decision-making mechanism,and provide a new understanding when taking appropriate investment strategy.Besides,it also provides some theoretical support for the stock market regulators to develop appropriate regulatory policies.