Hardening Soft Information: Evidence on Analyst Integration Costs
Quick summary
arXiv:2505.12269v4 Announce Type: replace-cross Abstract: We examine how the cost of transforming qualitative information into precise numerical estimates--a form of integration cost--creates a structural friction in expectations formation. To isolate this integration cost from the costs of information awareness and acquisition, we exploit sell-side analyst reports, in which the same forecaster simultaneously produces textual narratives and numerical forecasts. Because the information underlying the text has already been acquired, any systematic gap between the two outputs can be attributed to
Key takeaways
- arXiv:2505.12269v4 Announce Type: replace-cross Abstract: We examine how the cost of transforming qualitative information into precise numerical estimates--a form of integration cost--creates a structural friction in expectations formation.
- To isolate this integration cost from the costs of information awareness and acquisition, we exploit sell-side analyst reports, in which the same forecaster simultaneously produces textual narratives and numerical forecasts.
- Because the information underlying the text has already been acquired, any systematic gap between the two outputs can be attributed to
Why it matters
This development shows AI moving deeper into everyday software. Productivity potential should be weighed against price, data permissions, exportability and the preservation of human control.
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