TwinMarket: A Scalable Behavioral and Social Simulation for Financial Markets

Benyou Wang (The Chinese University of Hong Kong, Shenzhen) · Yifei Zhang (The Chinese University of Hong Kong) · Yuzhe YANG (The Chinese University of Hong Kong, Shenzhen) · Minghao Wu (The Chinese University of Hong Kong, Shenzhen) · Kaidi Zhang (The Chinese University of Hong Kong) · Yunmiao Zhang (nanjing university) · Honghai Yu (nanjing university) · Yan Hu (The Chinese University of Hong Kong, Shenzhen)
agent-based modelscognitive biasescollective dynamicsdecision-makingemergent phenomenaemotional fluctuationsfeedback mechanismsfinancial bubblesgroup behaviorslarge language modelmulti-agent frameworknon-rational influencessimulated stock marketsocial emergencesocio-economic dynamicstwinmarket

The study of social emergence has long been a central focus in social science. Traditional modeling approaches, such as rule-based Agent-Based Models (ABMs), struggle to capture the diversity and complexity of human behavior, particularly the irrational factors emphasized in behavioral economics. Recently, large language model (LLM) agents have gained traction as simulation tools for modeling human behavior in social science and role-playing applications. Studies suggest that LLMs can account for cognitive biases, emotional fluctuations, and other non-rational influences, enabling more realistic simulations of socio-economic dynamics. In this work, we introduce TwinMarket, a novel multi-agent framework that leverages LLMs to simulate socio-economic systems. Specifically, we examine how individual behaviors, through interactions and feedback mechanisms, give rise to collective dynamics and emergent phenomena. Through experiments in a simulated stock market environment, we demonstrate how individual actions can trigger group behaviors, leading to emergent outcomes such as financial bubbles and recessions. Our approach provides valuable insights into the complex interplay between individual decision-making and collective socio-economic patterns.