Impact of information disparity between individual investors on profits of meme stocks using an artificial market simulation approach

Miyuki Matsumoto (), Ryuji Hashimoto (), Masahiro Suzuki (), Yuri Murayama () and Kiyoshi Izumi ()
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Miyuki Matsumoto: The University of Tokyo
Ryuji Hashimoto: The University of Tokyo
Masahiro Suzuki: The University of Tokyo
Yuri Murayama: The University of Tokyo
Kiyoshi Izumi: The University of Tokyo

Journal of Computational Social Science, 2025, vol. 8, issue 1, No 25, 29 pages

Abstract: Abstract The growth of social media recently has made individual investors more reliant on online media for information. This trend significantly affects investor behavior and information disparity. For instance, social media can lead to the phenomenon of “meme stocks," in which stock prices rapidly rise and fall. Despite increasing interest in meme stocks, few studies have focused on the information disparity. In this study, we model meme stocks focusing on investors who are influenced by social network information, leading to information spread. We combine the Susceptible-Infectious-Recovered (SIR) model with a network model in an artificial market simulation to examine information disparity among individual investors. Our findings show that conventional investors generally profit, whereas social media investors incur losses. Additionally, the profits of social media investors are heavily affected by their network structure and their network distance from the information source. The results highlight the issue of information inequality in financial markets and offer important guidance for policymakers.

Keywords: Multi-agent simulation; Financial market; Susceptible-Infectious-Recovered (SIR) model; Network model (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s42001-024-00355-7

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