The influence of the time delay of information flow on an economy evolution. The stock market analysis

TL;DR

This paper investigates how delays in information flow affect stock market and economic dynamics, revealing that longer delays induce collective behaviors and oscillations in market indicators.

Contribution

It introduces a model coupling stock market and economy, analyzing the impact of information delay length on system behavior, highlighting the emergence of collective phenomena.

Findings

Longer information delays cause collective agent behavior.

Increased delays lead to oscillations in autocorrelations of log-returns.

Delays influence the stability and dynamics of the modeled economy.

Abstract

The decision process requires information about the present state of the system, but in economy acquiring data and processing them is an expensive and time consuming process. Therefore the state of the system is measured and announced at the end of the well defined time intervals. The model of a stock market coupled with an economy is investigated and the role of the length of the time delay of information flow investigated. It is shown that increasing the time delay leads to collective behavior of agents and oscillations of autocorrelations in absolute log-returns.