Agent-based modeling in financial markets

Subject Areas : Journal of Investment Knowledge

Hamidreza  Vakili fard ¹ (Faculty Members of Department of Accounting, Science and Research Branch, Islamic Azad University)
Mehdi  Khoshnood ² (Faculty Members of Department of Accounting, Roudsar and Amlash Branch ,Islamic Azad University)
Heidar  Foroughnejad ³ (Sama Technical and Vocational Training College, Islamic Azad University, Andisheh Branch)
Mohamad  Osoolian ⁴ (PhD in Finance from the Shahid Beheshti University)

Received: 2014-05-06 Accepted : 2014-08-26 Published : 2014-08-26

Keywords: Biases, Agent - based approach, Behavioral Finance, Artificial Intelligence, Object-Oriented Programming,

Abstract :

After stabilization the two main paradigms of classical and behavioral finance in the second half of the twentieth century some problems s arose about the validity of researches such as Complexity of the behavior of investors , Retrospective data and limiting rules on the confidentiality of personal accounts and financial information to investors. This problem creates a new approach in the field of Financial Studies that is Agent – based modeling approach which is based on the concepts of artificial intelligence, simulation, and creating artificial financial market.  In This paper will discuss the agent-based approach and its application in financial markets, most software for the creation of artificial financial markets and the use of agent-based models in the classical and behavioral finance. Based on the results of this research agent-based modeling approach beside of classical and behavioral finance paradigm can increase the accuracy and efficiency of the financial markets researches.