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Skill Acquisition and Data Sales

Author

Listed:
  • Shiyang Huang

    (Faculty of Business and Economics, The University of Hong Kong, Hong Kong)

  • Yan Xiong

    (School of Business and Management, Hong Kong University of Science and Technology, Hong Kong)

  • Liyan Yang

    (Rotman School of Management, University of Toronto, Toronto, Ontario M5S 3E6, Canada; Guanghua School of Management, Peking University, 100871, Peking, China)

Abstract

We develop a data-sales model to study the implications of alternative data for financial markets. Investors acquire skills to process the purchased raw data, and developing such skills is costly and involves considerable uncertainty. The data vendor controls the size of the data sample to influence the precision of the information investors can extract from the purchased data. Price informativeness is hump-shaped in skill-acquisition costs although the cost of capital and return volatility are U-shaped in skill-acquisition costs. Similar patterns can arise for skill mean and volatility. Our analysis suggests that the funds and data industries foster each other.

Suggested Citation

  • Shiyang Huang & Yan Xiong & Liyan Yang, 2022. "Skill Acquisition and Data Sales," Management Science, INFORMS, vol. 68(8), pages 6116-6144, August.
    • Handle: RePEc:inm:ormnsc:v:68:y:2022:i:8:p:6116-6144
    DOI: 10.1287/mnsc.2021.4117
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    References listed on IDEAS

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    2. Xi Li & Xin (Shane) Wang & Barrie R. Nault, 2024. "Is Personalized Pricing Profitable When Firms Can Differentiate?," Management Science, INFORMS, vol. 70(7), pages 4184-4199, July.

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