Understanding How Short-Termism and a Dynamic Investor Network Affects Investor Returns: An Agent-Based Perspective

Table 2

Investor network behavior rationale.

Outperformed the market?	Positive Network Trust?	Action	The Rationale for the Behavior
Yes	Yes	Keep all advisers and add an Oracle	These investors judge that their advisers are a significant overall source of outperformance. Therefore, they are willing to overlook the individual performance of their advisers (noting that they already adjust their trust) in the rewiring process and merely look to add an Oracle in the expectation of improving their incoming information.
Yes	No	Do nothing	These investors are attributing their outperformance to the other information sources. That is, there is not a strong belief that advisers can aid performance. They have already adjusted the trust in each neighbor; thereby, they would be already ignoring the advice, so do not see the need for change.
No	Yes	Cut bad advisers and add an equivalent number of Oracles	These investors have underperformed but given the positive level of trust in their network information assume that removing poor advisers and adding Oracles will reverse their underperformance. This mechanism contrasts to outperformers who are prepared to forgive poor advisers.
No	No	Cut bad advisers without adding new advisers	These investors are effectively attributing their underperformance to their network information and to turn around their performance will cut ties with their advisers and not seek new advisers. In the extreme, these investors will only use public and private information.