The Interdependence between Individual and Group Decision-M aking with Applications in Chinese Stock Market

Guocheng Wang, Bingxue Wang, Shiguo Zhang 
(1. Department of Economics, University of Sheffield, UK; 2. Chinese Academy of Social Science, China)

Abstract: It seems that understanding how individuals make decision within a group is an attractive and difficult challenge for economists, managerialists and researchers in human and social sciences for a long time, which is closely related to the theoretical development of economics. The rational assumptions of traditional economic theory, which are highly simplified and cannot manifestly illustrate the inherent mechanism for complexities of economic or financial phenomena (from behavioural perspectives). This paper devoted to seek a reasonable theoretical foundation under the framework of game theory and complex network, based on behavioral big data and the establishment of integrated model, to analyze the behavioral compatibility between individuals and collective deeply, which includes their static consistency and dynamic interactive adaptability. In addition, the paper built relevant computational experiment models to further understand the complex macro-phenomena based on real and heterogeneous investor’s behaviors with more extensive applications. Specifically, the paper contains three sections. Firstly, some typical types of relationship are listed for decision-making behaviors between individual and collective; Then, it is discussed to establish more coordinating consistent institutions and rules for understanding the independence between individual and collective decision-making behaviors through introducing virtual public player(s) into collective decision games; At last, by building the integrated ACE/F model of Chinese stock market, we try to clarify the inner relationship between the real investors’ behaviors with heterogeneity, interactions at micro-level and stylized facts at macro-level. Consequently, our theoretic viewpoint, to some extent, is positively supported by empirical evidence.

Key words: ACE/F, individual and collective behavior, heterogeneous interaction, financial market emergence

         JEL codes: C63, C91, G10