Intertemporal Information Acquisition and Investment Dynamics

65 Pages Posted: 2 Apr 2015

See all articles by Christian C. Opp

Christian C. Opp

University of Rochester - Simon Business School; National Bureau of Economic Research (NBER)

Date Written: February 1, 2015

Abstract

This paper studies intertemporal information acquisition by agents that are rational Bayesian learners and that dynamically optimize over consumption, investment in capital, and investment in information. The model predicts that investors acquire more information in times when future capital productivity is expected to be high, the cost of capital is low, new technologies are expected to have a persistent impact on productivity, and the scalability of investments is expected to be high. My results shed light on the economic mechanisms behind various dynamic aspects of information production by the financial sector, such as the sources of variation in returns on information acquisition for investment banks or private equity funds.

Keywords: Dynamic Information Acquisition, Investment, Asset Markets, Bayesian Learning

JEL Classification: C61, D83, D91, D92, G24

Suggested Citation

Opp, Christian C., Intertemporal Information Acquisition and Investment Dynamics (February 1, 2015). Available at SSRN: https://ssrn.com/abstract=2587852 or http://dx.doi.org/10.2139/ssrn.2587852

Christian C. Opp (Contact Author)

University of Rochester - Simon Business School ( email )

Rochester, NY 14627
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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