Complexity with Heterogeneous Fundamentalists and a Multiplicative Price Mechanism

type="main" xml:lang="en"> <title type="main">Abstract</title> <p>In contrast with the canonical models of financial markets with heterogeneous agents,, Naimzada and Ricchiuti, (<link href="#ecno12021-bib-0010"/>, <link href="#ecno12021-bib-0011"/>) show that the interaction of groups of agents who have the same trading rule but present different beliefs about the fundamental value could be a source of instability. In this paper, differently from, Naimzada and Ricchiuti, (<link href="#ecno12021-bib-0010"/>, <link href="#ecno12021-bib-0011"/>), we assume that the market maker employs a so-called multiplicative price mechanism (Tuinstra, <link href="#ecno12021-bib-0014"/>; Zhu et al., <link href="#ecno12021-bib-0017"/>). We show that the occurrence of heterogeneity has an ambiguous role: it may either stabilize or destabilize the market. </section>