Individual Investors and Swarm Intelligence
Posted: 30 Nov 2021
Date Written: November 29, 2021
Abstract
In this paper, we apply the methodology of swarm intelligence to investigate recent runup in prices for stocks like GameStop and AMC. We hand collected the posts, comments, and upvotes for four meme stocks from Reddit sub forum WallStreetBets from December 2020 to June 15, 2021. We investigate the impact of information flow on transaction prices in these stocks. We hypothesize that a small fraction of posts exert disproportional impact on stock prices. These posts serve as coordinating mechanisms around which the rest of the users rally, leading to sharp price moves.
Keywords: swarm intelligence, meme stocks, individual investors
JEL Classification: G10, G14, G20
Suggested Citation: Suggested Citation