Artificial Intelligence Alter Egos:Who benefits from Robo-investing?

Saturday July 6, 2019
  • Working Paper

Abstract

Artificial intelligence, or AI, enhancements are increasingly shaping our daily lives. Financial decision-making is no exception to this. We introduce the notion of AI Alter Egos, which are shadow robo-investors, and use a unique data set covering brokerage accounts for a large cross-section of investors over a sample from January 2003 to March 2012, which includes the 2008 financial crisis, to assess the benefits of robo-investing. We have detailed investor characteristics and records of all trades. Our data set consists of investors typically targeted for robo-advising. We explore robo-investing strategies commonly used in the industry, including some involving advanced machine learning methods. The man versus machine comparison allows us to shed light on potential benefits the emerging robo-advising industry may provide to certain segments of the population, such as low income and/or high risk averse investors.

Note: Research papers posted on SSRN, including any findings, may differ from the final version chosen for publication in academic journals.

Citation

D'Hont, C., De Winne, R., Ghysels, E., & Raymond, S. (2019). Artificial Intelligence Alter Egos: Who benefits from Robo-investing?
Available at SSRN: https://ssrn.com/abstract=3415981