Abstract: A variety of irrational investment decisions are caused by information asymmetry and market noise in the securities market. As a result, individual investors might be hunted by institutional investors and stock price manipulators. In this research, the behavior of individual investors is studied, and evolutionary games are proposed to simulate the behaviors of players in abnormal stock trading including abnormal rise and fall of prices. Analysis of stable equilibrium points shows that “trading suspension of rising stocks” makes individual investors more cautious in buying transactions. That helps to curb some institutional investors using the herd effect to manipulate stock prices. In contrast, “trading suspension of downward stocks” is influenced by factors, such as the credibility of the regulatory authorities, long-term and short-term losses and is easy to cause panic of investors. When continuous selling leads to increasing decline of stock prices, it is difficult to stabilize the market. The conclusion of this study provides some inspiration for explaining the effect and failure of circuit breakers in China from the perspective of evolutionary game analysis.

Key words: limited rationality, security, evolutionary game, stock suspension