Investment Decisions and Falling Cost of Data Analytics
53 Pages Posted: 17 Mar 2018 Last revised: 28 Mar 2018
Date Written: March 24, 2018
This paper studies investment decisions and their data analytics. We show that financially constrained or highly risk-averse investors use less data analytics. We also show that the demand of data analytics is highest for investment opportunities with high expected returns and the demand is either high or zero for opportunities with low expected returns. Furthermore, the falling cost of data analytics raises investors' leverage, which leads to higher losses during the crises.
Keywords: information, analytics, investment, leverage, demand curve
JEL Classification: D81, D83, G11
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