Bubbles and erratic stock prices linked to traders' learning behavior.
The article explores how different types of traders in a market can impact the stability of stock prices. By using simple learning algorithms, the researchers found that certain types of traders can lead to bubbles and erratic behavior in stock prices. Specifically, the Ordinary Least Squares algorithm only ensures stable prices if positive feedback traders are present, while the Least Mean Squares algorithm can stabilize prices with the right initial beliefs.