Investment Decisions and Falling Cost of Data Analytics

68 Pages Posted: 17 Mar 2018 Last revised: 28 Mar 2018

Jussi Keppo

National University of Singapore - NUS Business School

Hong Ming Tan

National University of Singapore (NUS) - NUS Business School

Chao Zhou

National University of Singapore (NUS) - Department of Mathematics

Date Written: March 24, 2018

Abstract

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

Suggested Citation

Keppo, Jussi and Tan, Hong Ming and Zhou, Chao, Investment Decisions and Falling Cost of Data Analytics (March 24, 2018). Available at SSRN: https://ssrn.com/abstract=3141043 or http://dx.doi.org/10.2139/ssrn.3141043

Jussi Keppo (Contact Author)

National University of Singapore - NUS Business School ( email )

1 Business Link
Singapore, 117592
Singapore

Hong Ming Tan

National University of Singapore (NUS) - NUS Business School ( email )

1 Business Link
Singapore, 117592
Singapore

Chao Zhou

National University of Singapore (NUS) - Department of Mathematics ( email )

Department of Mathematics
Singapore, 117543
Singapore

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