Is an investor stolen their profits by mimic investors? Investigated by an agent-based model

Paper: arXiv 2603.03671

Authors: Takanobu Mizuta, Isao Yagi

Abstract

Some investors say increasing investors with the same strategy decreasing their profits per an investor. On the other hand, some investors using technical analysis used to use same strategy and parameters with other investors, and say that it is better. Those argues are conflicted each other because one argues using with same strategy decreases profits but another argues it increase profits. However, those arguments have not been investigated yet. In this study, the agent-based artificial financial market model(ABAFMM) was built by adding “additional agents”(AAs) that includes additional fundamental agents (AFAs) and additional technical agents (ATAs) to the prior model. The AFAs(ATAs) trade obeying simple fundamental(technical) strategy having only the one parameter. We investigated earnings of AAs when AAs increased. We found that in the case with increasing AFAs, market prices are made stable that leads to decrease their profits. In the case with increasing ATAs, market prices are made unstable that leads to gain their profits more.

Complexity vs Empirical Score

• Math Complexity: 3.0/10
• Empirical Rigor: 3.0/10
• Quadrant: Philosophers — conceptual discussion, limited math and data

Why this score: The paper presents an intuitive agent-based simulation exploring the impact of fundamental vs. technical ‘mimic’ traders on market stability and profits. However, it relies entirely on basic synthetic simulations without real empirical market data, rigorous statistical validation, or advanced mathematical formulations.

Research Flowchart

  flowchart TD
    A["Research Goal: Resolve conflict on whether<br>mimic investors increase or decrease profits"] --> B["Build ABAFMM Simulation Model"]
    B --> C["Inject Additional Agents (AAs)<br>Inputs: AFAs & ATAs with single parameter"]
    C --> D["Run Market Simulation<br>Increasing AA Population"]
    D --> E{"Computational Analysis:<br>Impact on Market & Earnings"}
    E --> F["Outcome 1: AFAs Increase<br>Market Stabilizes ➔ Profits Decrease"]
    E --> G["Outcome 2: ATAs Increase<br>Market Destabilizes ➔ Profits Increase"]

Cited References (1)

1. Financial Market Design by an Agent-Based Model (2025)

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