Survey of Magnet Effect in Business Cycle and Investment

Theoretically in economics, perfect competition market is the best and most efficient market. Such a market has as much as suppliers and demanders that no one can affect it solely and only significant changes can vary prices. Low depth of Tehran Stock Exchange causes costs to investors as a play of some participants and behavioral biases. Price limit is an opportunity for market to take and make decision more effective. Results of this research show that, due to price limitation in market, magnet effect phenomenon is appeared. It absorbs investors avoiding losses. In includes top 30 publicly traded companies like many others, and unexpectedly institutional investors have more tendency to limits. Other finding of the research indicates that fluctuation will be controlled as a result of magnet effect; meanwhile it does not affect wave length of price indices.