Price limit and the stability of stock market: An application based on multi-agent system

This paper studies the impact of the daily price limit policy on the stability of stock market, through the establishment of computer simulation program towards the stock market and a great amount of experiments. We find that for the market with a relative small scale, the daily price limit policy is conductive to the stability and reduces the volatility of the stock price to a certain extent, while, for the market with a relative large scale, the policy lowers the stability of the stock market and exacerbates the price fluctuation.