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Modeling of price and profit in coupled-ring networks

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  • Kittiwat Tangmongkollert

    (NECTEC-MU Collaborative Research Unit on Quantum Information, Department of Physics, Faculty of Science, Mahidol University)

  • Sujin Suwanna

    (NECTEC-MU Collaborative Research Unit on Quantum Information, Department of Physics, Faculty of Science, Mahidol University)

Abstract

We study the behaviors of magnetization, price, and profit profiles in ring networks in the presence of the external magnetic field. The Ising model is used to determine the state of each node, which is mapped to the buy-or-sell state in a financial market, where +1 is identified as the buying state, and −1 as the selling state. Price and profit mechanisms are modeled based on the assumption that price should increase if demand is larger than supply, and it should decrease otherwise. We find that the magnetization can be induced between two rings via coupling links, where the induced magnetization strength depends on the number of the coupling links. Consequently, the price behaves linearly with time, where its rate of change depends on the magnetization. The profit grows like a quadratic polynomial with coefficients dependent on the magnetization. If two rings have opposite direction of net spins, the price flows in the direction of the majority spins, and the network with the minority spins gets a loss in profit.

Suggested Citation

  • Kittiwat Tangmongkollert & Sujin Suwanna, 2016. "Modeling of price and profit in coupled-ring networks," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 89(6), pages 1-9, June.
    • Handle: RePEc:spr:eurphb:v:89:y:2016:i:6:d:10.1140_epjb_e2016-60248-y
    DOI: 10.1140/epjb/e2016-60248-y
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    References listed on IDEAS

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    1. Frédéric Abergel & Anirban Chakraborti & Hideaki Aoyama & B.K. Chakrabarti & Asim Gosh, 2014. "Econophysics of agent-based models," Post-Print hal-01006419, HAL.
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    Cited by:

    1. Jaroonchokanan, Nawee & Termsaithong, Teerasit & Suwanna, Sujin, 2022. "Dynamics of hierarchical clustering in stocks market during financial crises," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 607(C).
    2. Wang, Yiduan & Zheng, Shenzhou & Zhang, Wei & Wang, Jun & Wang, Guochao, 2018. "Modeling and complexity of stochastic interacting Lévy type financial price dynamics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 499(C), pages 498-511.

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    Keywords

    Statistical and Nonlinear Physics;

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