The behaviour of economic agents in the financial market resembles species' actions in ecosystems facing evolution, natural selection and competition.

Market ecology considers financial markets as ecosystems of diverse trading strategies. While previous research has focused on a few simplified types of traders, we extend the market ecology perspective to a multi-agent system with diverse trading strategies. We include technical trading at various time horizons, value investors with heterogeneous valuations and noise traders driven by herding.

As real trading strategies are not fixed but change to maximise financial performance, we also consider agents capable of profit-driven trading strategy adaptation. Seeing market ecologies as stochastic dynamical systems, we characterise market ecology dynamics with multiple species and density-dependent interactions terms. Some trading strategies can cooperate or compete just as biological species depending on wealth distributions. We jointly develop a Lotka-Volterra equations framework and multi-agent simulations to understand trading strategies interactions between and within types and ecology attractors. We also highlight the impact of performance-driven adaptation of trading strategies on ecology dynamics. We open towards modelling strategy innovation in market ecology: the endogenous creation of new strategies beyond modeller-defined types.

This talk is organised by INET Oxford

REGISTRATION

This talk is live in-person at the Manor Road Building and online

To register and for more information - https://www.inet.ox.ac.uk/events/evolutionary-dynamics-in-market-ecologies-aymeric-vie-complexity-economics-programme/