If, on the other hand, we allow the traders to adapt to new market observations at a more realistic rate, heterogeneous beliefs persist, and the market self-organizes into a complex regime. A rich “market psychology”—a rich set of expectations—becomes observable. Technical trading emerges as a profitable activity, and temporary bubbles and crashes occur from time to time. Trading volume is high, with times of quiescence alternating with times of intense market activity. The price time series shows persistence in volatility, the characteristic GARCH signature of price series from actual financial markets. And it shows persistence in trading volume. And over the period of our experiments, at.
