# Simulation of Social Media-Driven Bubble Formation in Financial Markets using an Agent-Based Model with Hierarchical Influence Network

arXiv: https://arxiv.org/abs/2409.00742 · HTML: https://mlsanity.com/paper/2409.00742/

## Key facts

- Cited by 1 papers in the map (data through 14 Oct 2026).
- Builds on 0 of its 27 references that are in the map.
- First posted on arXiv 1 Sep 2024.

## Built on by (most cited first, 1 of 1)

- [Agentic Trading: When LLM Agents Meet Financial Markets](https://mlsanity.com/paper/2605.19337/) (2026)

## Abstract (arXiv)

We propose that a tree-like hierarchical structure represents a simple and effective way to model the emergent behaviour of financial markets, especially markets where there exists a pronounced intersection between social media influences and investor behaviour. To explore this hypothesis, we introduce an agent-based model of financial markets, where trading agents are embedded in a hierarchical network of communities, and communities influence the strategies and opinions of traders. Empirical analysis of the model shows that its behaviour conforms to several stylized facts observed in real financial markets; and the model is able to realistically simulate the effects that social media-driven phenomena, such as echo chambers and pump-and-dump schemes, have on financial markets.