0 a person or company that continuously buys and sells shares in particular companies for particular prices:
Note that the market-maker behavior in this model is highly stylized.
For the market-maker model, it would also be feasible to introduce a changing variance.
With the market-maker scenario, the attractors can extend into both positive and negative phases.
Under a market-maker scenario, this paper studies how the dynamics of asset prices are affected by different risk attitudes and different learning schemes of different types of investors.
Our focus in this paper is on both the theoretical and numerical behavior of asset prices resulting from the interaction of heterogeneous investors under a (admittedly stylized) market-maker price-setting mechanism.
The differential between the buying and selling quotes, or the bidoffer spread, is how the market-maker makes profit.
However, when an intermediary is trading on its own account and not merely hedging financial exposures created in its market-maker role, potential conflicts of interest arise.
Many influential market-makers believe that that is inevitable.