We develop a financial market model with heterogeneous agents who can be affected by confirmation bias. In particular we consider optimistic and pessimistic agents who adjust their beliefs giving more attention and consideration to evidences supporting their prior beliefs. These kinds of traders coexist with fundamentalists and chartists. We show that this psychological bias makes beliefs more and more distant as time passes, and permits to better explain some important stylized facts of financial markets.
|Numero di pagine||8|
|Rivista||Structural Change and Economic Dynamics|
|Stato di pubblicazione||Pubblicato - 2019|
- Financial markets
- Heterogeneous agents
- Monte Carlo simulations
- Piecewise-defined maps