Discrete Dynamics in Nature and Society
Volume 2012 (2012), Article ID 138178, 15 pages
Research Article

An Evolution Model of Trading Behavior Based on Peer Effect in Networks

1School of Economics and Management, Southeast University, Nanjing, Jiangsu 211189, China
2Nanjing Institute of Railway Technology, Nanjing, Jiangsu 210031, China
3School of Business, Nanjing Normal University, Nanjing, Jiangsu 210097, China

Received 3 November 2011; Revised 23 February 2012; Accepted 6 March 2012

Academic Editor: M. De la Sen

Copyright © 2012 Yue-Tang Bian et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.


This work concerns the modeling of evolvement of trading behavior in stock markets which can cause significant impact on the movements of prices and volatilities. Based on the assumption of the investors' limited rationality, the evolution mechanism of trading behavior is modeled according to peer effect in network, that investors are prone to imitate their neighbors' activity through comprehensive analysis on the neighboring preferred degree, self-psychological preference, and the network topology of the relationship among them. We investigate by mean-field analysis and extensive simulations the evolution of investors' trading behavior in various typical networks under different characteristics of peer effect. Our results indicate that the evolution of investors' behavior is affected by the network structure of stock market and the effect of neighboring preferred degree; the stability of equilibrium states of investors' behavior dynamics is directly related with the concavity and convexity of the peer effect function; connectivity and heterogeneity of the network play an important role in the evolution of the investment behavior in stock market.