Can artificial intelligence beat the stock market?

Garrison Hongyu Song and Ajeet Jain

Studies in Economics and Finance, 2022, vol. 39, issue 5, 772-785

Abstract: Purpose - Academia and financial practitioners have mixed opinions about whether artificial intelligence (AI) can beat the stock market. The purpose of this paper is to investigate theoretically what would happen if AI has further evolved into a superior ability to predict the future more accurately than average investors. Design/methodology/approach - A theoretical model in an endowment economy with two types of representative investors (traditional investors and AI investors) is proposed, and based on the model, a long-run survival analysis for both types of investors is implemented. Findings - The model presented in this paper indicates that being equipped with a superior ability to predict the future more accurately than traditional investors cannot guarantee AI investors to always beat the stock market in the long run. Those investors may be extinct, all depending on the structure/parameters of the stock market. Originality/value - To the best of the author’s knowledge, they are the first to set up a representative agent equilibrium model to explore the above question seriously.

Keywords: Artificial intelligence (AI); Efficient market hypothesis; Hedge fund; AI-based investment strategy (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:sefpps:sef-03-2022-0133

DOI: 10.1108/SEF-03-2022-0133

Access Statistics for this article

Studies in Economics and Finance is currently edited by Prof Niklas Wagner

More articles in Studies in Economics and Finance from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().