Impact Analysis on Stock Prices by Information Propagation in Social Networks using Artificial Market Simulations

Abstract

The rise of the internet has increased individual investors' use of online media, impacting the stock market, and leading to the emergence of meme stocks. These stocks experience rapid price fluctuations due to group activities online. Yet, there are limited studies using models to understand this phenomenon. In this study, we model meme stocks as a group of investors influenced by social network information using an artificial market simulation that combines the SIR model with a network model. Our analysis shows that the network structure differences among these groups lead to variations in investor numbers, market presence duration, and overall market impact. Generally, while existing investors gain profits, the investor groups often face losses. Notably, the distance from the information source on the network significantly influences these groups' profits.