Herding effects in order driven markets: The rise and fall of gurus

Giulia Iori and Gabriele Tedeschi

Working Papers from Department of Economics, City University London

Abstract: We introduce an order driver market model with heterogeneous traders that imitate each other on a dynamic network structure. The communication structure evolves endogenously via a fitness mechanism based on agents performance. We assess under which assumptions imitation, among otherway noise traders, can give rise to the emergence of gurus and their rise and fall in popularity over time. We study the wealth distribution of gurus, followers and non followers and show that traders have an incentive to imitate and to be imitated since herding turns out to be profitable.

Keywords: dynamic network; herding; guru; order driver market (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (3)

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Journal Article: Herding effects in order driven markets: The rise and fall of gurus (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:cty:dpaper:10/05

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