The Evidence of Institutional Investors' Herd Behavior and the Research on Market Simulation

In the context of vigorously developing China's securities market institutional investors in the period of economic transition,this paper does the empirical research on the herd behavior from the view of the interaction between individual and institutional investors. This paper adopts the standard deviation of trading volume the cross-section to measure herd behavior. The results show that no matter what the market is in bull status and bear status,institutional investors perform herd behavior and with the expansion of the shareholding scale in a bull market,the herd behavior is higher,which suggests that the vigorous development of institutional investors has not eliminated herd behavior. This paper further confirms that there is the endogenous volatility in the market based on an artificial stock market. Finally it is demonstrated the herd behavior of institutional investors cause abnormal fluctuations in the market.