AI Automation and Effort Allocation: Evidence from Sophisticated Investors
Abstract
Sophisticated investors exert more effort at human-intensive tasks in the age of AI. I hypothesize that AI reduces costs of collecting machine-based information, thereby facilitating human- interaction-based information acquisition. Using an event study design and an IV approach, I find that hedge funds increase earnings call participation—along both the extensive and intensive margins—after adopting machine downloads of SEC filings. Post-automation call attendance is associated with higher fund returns and profitable stock trades. Overall, this study identifies a novel AI-productivity mechanism: by substituting for human effort at automation-prone tasks, AI complements high-skilled workers without directly augmenting them at interaction-based tasks.