The Impact Of Informed Traders On Asset Prices

Information asymmetry in the financial market is much serious,and most relevant studies currently do not take social networks into consideration.This is no longer applicable in today’s increasingly close relationship among investors.Based on the research framework of Han and Yang,this paper constructs a simulation trading model with relatively more intelligent agents,introduces three different social network topologies and expands to study the difference in asset price changes under different initial states of the market.The intelligence of agents is embodied in two aspects: one is that informed traders can choose whether to share their own private information,and the other is that rational traders can independently update their trust in surrounding neighbors.The final results show that under any network topology: when the market is in a relatively stable initial state,the existence of rational traders can reduce the price fluctuations of assets;while the real value information shared by informed traders through social networks will increase market volatility within a reasonable range;but at the same time it reduces the deviation between market price and real value,and improves pricing efficiency;when there are more bubbles in the market,informed traders will promote the sharing of value information through social networks,make investors pay more attention to value investment,reduce price fluctuations,and improve pricing efficiency.In addition,this paper also finds that the experimental results obtained by informed traders who choose different sharing methods are affected by the network topology,and whether rational traders update their trust level will not affect the results,nor is it affected by the network topology.