Information is an essential component of all financial markets and transactions. However information can arrive in multiple forms. In this paper, I begin to define what is meant by hard and soft information. Hard information is quantitative, easy to store and transmit in impersonal ways, and its content is independent of the collection process. Technology is changing the way we communicate and thus must fundamentally change the way financial markets and institutions operate. One of these changes is a greater reliance on hard relative to soft information in financial transactions. This paper discusses the advantages and costs of this substitution and the possible consequences of the hardening of information on both financial markets and institutions as well as those who study them.
|Original language||English (US)|
|Number of pages||20|
|State||Published - Jul 2004|