Exploring the Impact of Competing Narratives on Financial Markets I: An Opinionated Trader Agent-Based Model as a Practical Testbed

This paper introduces a framework to empirically investigate the influence of competing narratives on financial market dynamics. I present an agent-based model of traders in a financial market, where traders are driven by opinion dynamics and are subject to self-reinforcement, herding behaviors, and an accumulative response to new information. My systematic approach includes isolating these factors, enabling a parametric analysis within the collective opinion dynamics of the market. This simulation provides a testbed to evaluate various market scenarios. While my findings are based on simulated data and thus warrant caution in real-world interpretation, they offer important insights into market fluctuations. This study lays groundwork for further research on trader behavior and market dynamics, and I have made the source-code publicly available for replication and extension.