Can LLMs model social media impact on financial markets?
Simulation of Social Media-Driven Bubble Formation in Financial Markets using an Agent-Based Model with Hierarchical Influence Network
September 4, 2024
https://arxiv.org/pdf/2409.00742This paper investigates how social media influences financial market behavior using a multi-agent simulation.
Key points for LLM-based multi-agent systems:
- Hierarchical networks effectively model information flow: The model uses a hierarchy to represent communities and information spread on social media, impacting agent behavior (trading decisions). This highlights the importance of hierarchical structures in multi-agent systems where LLMs could be used to simulate communication and influence within these structures.
- Echo chambers exacerbate speculation: The study simulates echo chambers by amplifying conforming opinions, resulting in increased market volatility. This demonstrates how LLMs could be used to model and analyze the impact of biased information spread in multi-agent systems.
- Model vulnerabilities to manipulation: The model successfully simulates pump-and-dump schemes, showing how coordinated agents can manipulate markets. This highlights the need to consider and mitigate potential vulnerabilities to manipulation when designing LLM-based multi-agent systems, especially in scenarios with financial implications.