Is Human-Interaction-based Information Substitutable?

65 Pages Posted: 11 May 2021 Last revised: 18 Apr 2024

See all articles by Jennie Bai

Jennie Bai

Georgetown University - McDonough School of Business; National Bureau of Economic Research (NBER)

Massimo Massa

INSEAD - Finance

Multiple version iconThere are 2 versions of this paper

Date Written: March 2, 2024


We investigate information substitutability using a quasi-natural experiment: the pandemic-triggered lockdown that restricted physical interactions, impacting the collection, processing, and transmission of interaction-based information. By leveraging variations in the lockdown and its impact on proximate investment, we show that funds relying more on physical interactions for information significantly underperformed during the lockdown compared to others. The loss of their information edge prompted funds to diversify portfolios and mitigate risk. These results suggest the irreplaceability of physical-interaction-based information. Moreover, while virtual platforms offer some buffer, they cannot entirely replace in-person meetings in generating sufficient information.

Keywords: Information substitutability, human interactions, synchronous interactions, asynchronous interactions, COVID-19, proximity investment, mutual funds

JEL Classification: G12, G14, G23

Suggested Citation

Bai, Jennie and Massa, Massimo, Is Human-Interaction-based Information Substitutable? (March 2, 2024). Georgetown McDonough School of Business Research Paper No. 3843782, INSEAD Working Paper No. 2023/30/FIN, Available at SSRN: or

Jennie Bai (Contact Author)

Georgetown University - McDonough School of Business ( email )

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National Bureau of Economic Research (NBER) ( email )

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Massimo Massa

INSEAD - Finance ( email )

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+33 1 6072 4481 (Phone)
+33 1 6072 4045 (Fax)

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