Abstract: This paper adopts behavioral simulation experiments with the real people to study the relationship between fund size and stock price volatility. The results of four contrasted experiments show that the volatility of market which consists of funds with different capital sizes is much larger than the market which consists of funds with same capital size, and the difference of price variance between the two markets reaches 362 times. We also simulate the circumstance in which the market has a superfund, and the results show that the superfund leads to greater volatility. Based on the conclusion, we advise that the stability of the market can be adjusted by controlling the distribution of fund size. Once the superfund exists, we should take measures to prevent it from manipulating the market.

Key words: fund size, market volatility, financial experiment