STOCK market investors who buy and sell on the flip of a coin might sound irresponsible, but a handful of random traders could be just what markets need to avoid bubbles and subsequent crashes.
Financial booms and busts occur when traders all rush to purchase or sell stock just because others around them are. “I see someone investing, I suppose that they probably have more information than me,” says Alessandro Pluchino of the University of Catania, Italy.
Pluchino and his colleagues wondered whether it was possible to stop this cascade of copycat behaviour by introducing a random element – traders who ignore all available information and instead buy or sell with equal probability.
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