Market Diversity and Market Efficiency: The Approach Based on Genetic Programming
Chia-Hsuan Yeh, Shu‐Heng Chen · Simulation of Adaptive Behavior · 2001
The relation between market diversity and market efficiency has been studied. Economic heterogeneity is a fundamental driving force and an essential property in the economic systems. People who have different perspectives, technologies, or endowments may benefit from their trading behavior which constitutes economic activities. In this paper, economic simulation based on the growing field of artificial stock market is employed to study this issue. Market size and different learning styles are used to discuss the influence of heterogeneity. Simulation results have demonstrated that more participants and individual learning cause higher degree of traders’ diversity, which, in turn, enhances market efficiency.