A controllable laboratory stock market for modeling real stock markets Kenan An, Xiaohui Li, Guang Yang, and Jiping Huang Department of Physics and State Key Laboratory of Surface Physics, Fudan University, Shanghai , P.R. China Abstract The researches on empirical econophysics in the literature are usually carried on the financial data extracted from real stock markets. However, due to the restrictions of law and morality of the markets, it is impossible to fully control the external conditions for real markets. Hence, for this methodology, it is hard to study the detailed impacts of different factors and the underlying dynamics for the stylized facts of the real markets. Here we present a laboratory stock market, which makes the impossible possible. Since the laboratory stock market provides some statistical results in good agreement with those obtained from the real stock markets, it allows us to study the impact of the external controlled conditions upon these results. Our research also gives some results on human behavior dynamics, which provides useful insights for future agent- based modeling. Market structure  Basic framework : Consider a market with N traders, indexed by i. Time is indexed by t. To simplify the problem, traders only decide how to manage their portfolios consisting of one stock and risk-free asset. The risk-free asset in our market is simply bank savings (cash). There are Q shares of stocks issued in the market.  Double auction order book : The double auction has been the most widely used system in equity markets for more than 140 years. In our market, a computer-aided double auction order book is introduced.  Exogenous rewards : Since our stock has no underlying value, we need to mimic dividends and interests to give traders information about the macro environment and the stock. Our solution is to add exogenous rewards to the system. Trading Platform A controllable laboratory stock market for modeling real stock markets, K. N. An, X. H. Li, G. Yang, and J. P. Huang, The European Physical Journal B, volume 86, 436 (2013) Experiment Data : 1-minute close price, return and volume series from the human experiments. Human behavior dynamics : Probability density functions of waiting times: (a) the stock waiting time and (b) the trader waiting time. Symbols of squares and circles denote the first and second round of experiments, respectively. Summary : Inspired by the need for more specific data for statistical analysis and human behavior dynamics researches, we designed a continuous trading double auction stock market. We run two experiments in laboratory with human subjects and found that the outputs of our market fit the existing statistical properties. Besides, we analyzed the order series and discovered some interesting results in human behavior dynamics. Our laboratory market still has some weak points, for example, the traders of our experiments are all university students, and there might be bias in the selection of this kind of participant group. However, as a well-tested market, it is easy to change different control parameters or add more extensions. And this market can produce more results in the further econophysics researches. The market and its outputs might also help agent-based model makers to mimic human behaviors in a more precise and realistic way.