Price dynamics, social networks and communication

A stock price dynamics model is developed in consideration of social network communication in financial markets. Considering a nonlinear feedback effect of price returns, we establish a self-organising system of price dynamics. Results show that the movement of prices depends on the topologies of networks and the communication effect. Furthermore, the self-reinforcing feature of price dynamics is explored and bubbles and crashes are explained as alternate strong positive and negative self-reinforcing processes of prices. (C) 2017 Elsevier Inc. All rights reserved.