Behavior of Investors on a Multi-Asset Market

24 Pages Posted: 28 Jun 2009

See all articles by Matjaz Steinbacher

Matjaz Steinbacher

Kiel Institute for the World Economy; University of Donja Gorica

Date Written: June 24, 2009

Abstract

This paper analyzes the field of investors’ decision-making on a multi-asset market. It does it through a simulation games on a social network framework. It has been demonstrated that more stocks there are in the game and more changing alternatives investors have available to choose from, tougher it is for them to make decisions. Despite in most simulations the safest alternative was dominant, many investors opt for portfolio of the safest and the riskiest stock, by which they back the risk they take with some safe stocks. Non-omniscient investors behave chaotically. In all the cases, liquidity agents proved to be decisive elements of the games, though not always able to deliver the information of all the alternatives when too many alternatives are available.

Keywords: social networks, behavioral finance, portfolio analysis, multi-asset game, chaos

JEL Classification: Z13, G11, C91, C73

Suggested Citation

Steinbacher, Matjaz, Behavior of Investors on a Multi-Asset Market (June 24, 2009). Available at SSRN: https://ssrn.com/abstract=1425000 or http://dx.doi.org/10.2139/ssrn.1425000

Matjaz Steinbacher (Contact Author)

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, D-24100
Germany

University of Donja Gorica ( email )

Podgorica, 81000
Montenegro

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