Date of Award

Spring 2023

Degree Name

Bachelor of Science (BS)

Advisor(s)

Andrey Ermolov

Abstract

The empirical part of this thesis determines if returns and trading volumes of some popular publicly traded stocks (e.g., Disney) follow a power law (and if yes, to what degree). Gabaix (2016)1 formally defined a power law as a relation of Y = aXβ. In this context, X and Y are the variables of interest, whilst the variable β is the power-law exponent. The theoretical part of this thesis will calibrate a theoretical heterogeneous agent model to potentially explain this behaviour. Explaining this behaviour can lead to understanding market fluctuations and determining macroeconomic policies, which in turn will help to understand the purchasing habits of investors.

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