Information: Hard and Soft
NBER Working Paper No. 25075
Information is a fundamental component of all financial transactions and markets, but it can arrive in multiple forms. We define what is meant by hard and soft information and describe the relative advantages of each. Hard information is quantitative, easy to store and transmit in impersonal ways, and its information content is independent of its collection. As technology changes the way we collect, process, and communicate information, it changes the structure of markets, design of financial intermediaries, and the incentives to use or misuse information. We survey the literature to understand how these concepts influence the continued evolution of financial markets and institutions.
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Document Object Identifier (DOI): 10.3386/w25075
Published: José María Liberti & Mitchell A Petersen, 2019. "Information: Hard and Soft," The Review of Corporate Finance Studies, vol 8(1), pages 1-41.