Exploring the Impact of Competing Narratives on Financial Markets II: An Opinionated Trader Agent-Based Model with Dynamic Feedback

Employing an agent-based trading model integrated with opinion dynamics, I conduct a systematic exploration of the factors potentially contributing to financial market frenzies. Applying my previously established testbed described in detail in a companion paper (part I), I examine the influence of two competing narratives on three hypotheses: self-reinforcement; herding; and an additive response to inputs. Utilizing a real-world dataset, I investigate these dynamics. The findings reveal that although all three hypotheses affect price movements, herding behavior has the most substantial impact. The source code for these simulations is available on Github, allowing researchers to replicate and extend this work.