Abstract
In nature and human societies, the effects of homogeneous and heterogeneous characteristics on the evolution of collective behaviors are quite different from each other. By incorporating pair pattern strategies and reference point strategies into an agent-based model, we have investigated the effects of homogeneous and heterogeneous investment strategies and reference points on price movement. In the market flooded with the investors with homogeneous investment strategies or homogeneous reference points, large price fluctuations occur. In the market flooded with the investors with heterogeneous investment strategies or heterogeneous reference points, moderate price fluctuations occur. The coexistence of different kinds of investment strategies can not only refrain from the occurrence of large price fluctuations but also the occurrence of no-trading states. The present model reveals that the coexistence of heterogeneous populations, whether they are the individuals with heterogeneous investment strategies or heterogeneous reference points of stock prices, is an important factor for the stability of the stock market.
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