I often find myself reminiscing on my days at university, though rarely with the kind of nostalgia people like to romanticise.
One aspect I distinctly recall is diving into online research archives in an essay-induced panic. Hardly an intellectual pursuit when performed at 1am, but these were before the days AI could come to your rescue.
Ironically, I now find myself doing the same thing for fun - and for my job. The two can be synonymous if you’re lucky. In one of these late-night rabbit holes, I came across a study that caught my attention: Does Paying for Data Change Investment Decisions? (2026). As the title implies, the authors aimed to determine whether the act of paying for investment data vs receiving it for free, would alter how participants would value the information and therefore act upon it.
This becomes particularly important when we consider the last two decades in financial markets: an explosion in retail involvement alongside a rise in the availability of market data. Conventional wisdom holds that more information is always better – but is that actually the case?
The test
Participants were asked to complete a series of trading rounds, each beginning with $100 and a graph showing past half-hour stock returns and buy/sell order-flow imbalance (the net difference between buying and selling pressure). In some rounds the imbalance helped predict the next return, and in others it was pure noise.
Crucially, the experimental group of participants had to decide whether to pay $4 for access to the additional data. After they made their choice, the computer randomly determined whether the round was a paid round where their decision was binding, or a free round, where everyone received the data regardless of what they chose. Participants then judged whether the data was informative and chose how much to invest. By contrast, control participants always received the data for free.
I’ll spare readers from any further commentary on the thrilling world of experimental-design. Let’s look at the findings.
What can we take away from this?
The authors documented three main findings:
- Paying distorts beliefs: Participants who paid for the data were 11% more likely to believe the information was useful, even if that was objectively not the case.
- Paying impairs performance: Participants who paid for the data placed 31% more emphasis on it, and end up presenting with 14% larger forecast errors.
- Paying changes behaviour: Paying was found to trigger a sunk-cost effect where people invested 7% more than they overwise would, simply because they paid for the data. The burden fell disproportionately on the least sophisticated investors with lower financial literacy, who invested almost 15% more in the same situation.
Whilst this was a very study-specific simulation, I think it points to something much broader. This isn’t just a trader’s problem. Everyday investors are exposed to the same informational pressures, whether it’s a paid newsletter, a premium research platform or a guru behind a paywall. The mechanism can be identical. Once you’ve paid for information, you’re far more likely to believe it and consequently act on it, even if the signal is weak.
I believe it’s healthy to maintain a suspicion of anything that comes wrapped in an air of prestige and an excessive price tag. We’re all looking to carve out an investment edge, but sometimes the hunt for that edge can end up doing more harm than good. The more we invest in acquiring information, the more determined we become to believe it’s correct, even when the evidence points the other way.
Of course, I realise the irony here. I work for an organisation that collects a portion of revenue through producing research, insights and analysis. Here lies the beauty of editorial independence. Ultimately, our investment goals are best served by good judgement, not by the price tag attached to the data we consume. Whatever information you choose to rely on, make sure it has earnt its influence over your decisions.
A note: I’ve tried my best to condense a 40-page study into something that fits within the limits of human attention. If you’d prefer the unabridged version (footnotes, regressions and all), the full paper awaits here.
Simonelle Mody
Also in this week's edition...
The defining challenge of retirement is about creating sustainable income. Mark LaMonica ranks three popular retirement strategies.
Are we worse off than previous generations? Shane Oliver from AMP examines the data to determine whether life was really better in the good old days.
Retirement on the horizon? Dwayne Fernandes from Principal Edge shares four key questions to ask yourself at the start of the financial year.
The companies building transformative tech rarely capture the greatest long-term value. Joe Davis, Chief Economist at Vanguard, discusses his thoughts on who gains in an AI supercharged economy.
Panic over the Division 296 cost base reset inspired Trevor Schmid to model what the million-dollar reset is actually worth.
Traditional valuation metrics used to forecast returns may have been misread. Larry Swedroe explores the implications for investors.
Joe Wiggins refutes the idea that fund managers should invest client money exactly as they invest their own.
This week's white paper is World Gold Council's mid-year outlook.
Curated by Simonelle Mody and Leisa Bell
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Weekend market update
From My Bui, AMP
The US-Iran ceasefire is “over” but Iran had “called and wanted to make a deal” so shares are slightly up – what’s new?! Over the last week, global markets have tumbled after US forces launched new strikes against Iranian military targets on Tuesday, while Iran responded by targeting US bases in the Gulf including in Kuwait, Bahrain and Qatar. Although downside risks have risen, markets seemed to agree that the worst of the war is behind us. US shares are up by 0.8% for the week, led by tech stocks and consumer discretionary. More vulnerable regions saw shares down including the Eurozone which fell by 1.2% and Japanese shares which were down 1.1%, while the ASX 200 fell slightly by 0.2%.
With war escalation, oil prices have risen further, from around US$72/bbl last week to as high as US$78 mid-week, before easing back to around US$76 and the futures curve is still in slight backwardation. This suggests markets see greater supply risk than before, but not a severe shortage, and conditions are still expected to improve over time.
The IMF projected that global growth would remain okay at around 3% for 2026 and even stronger at 3.4% in 2027, as downside risks have partially been offset by AI-driven demand. The global economy has weathered the shock better than feared but much of the positive surprise was concentrated in countries that add value in the technology supply chain (especially East Asian countries including Taiwan, Korea, China and Japan).
So, if war and tariffs are not the main market worries, what is? These days, it seems to be concern that AI investment is adding to inflation pressure, a sentiment echoed by Fed officials in the latest FOMC meeting minutes. Indeed, the rapid build out of AI infrastructure is driving a lot of investment in data centres, semiconductors, and electricity networks, which could create some short-term supply bottlenecks and push up prices of materials and labour. There have already been reports of multiple companies raising chip prices, evident in Chinese inflation data this week.
Of course, global inflation concerns go beyond the AI story. The IMF expects inflation to tick up from here as commodity prices remain elevated, with most major economies unlikely to return to target until next year. RBA Chief Economist Sarah Hunter also noted this week that geopolitical and supply shocks make central banks’ jobs harder, as they can push up consumers’ backward-looking inflation expectations. That means central banks may need to stay more aggressive to bring expectations back down. Australia certainly stands out with much higher core inflation rates than peers and the upward momentum does not look good either!
Australia’s labour market has held up better than most, but our real wages performance remains among the weakest in the developed world. The latest OECD labour market report showed unemployment is still low across most economies, but has edged up from a year ago, with some sectors facing more persistent labour shortages due to population ageing, the energy transition and digital transformation. Australia stands out in three ways: first, headline labour market outcomes remain stronger than the OECD average, with employment and participation near record highs and the unemployment rate at 4.4%, below the OECD average of 4.9%. Secondly, our younger graduates have fared relatively well, with much smaller gap between youth unemployment rates versus the rest of the population, unlike in the EU and Canada (interestingly, the OECD found that so far youth unemployment has not yet been driven by AI). Thirdly (and sadly), real wages growth in Australia is “one of the steepest declines” among peers since Q1 2021, and real wages are near the lowest point since the pandemic “only in New Zealand and Australia”. The driver of this is not new. Productivity in Australia has stalled for a whole decade and we are just now paying the price – through eroding purchasing power of wages income.
Building completions data for the March quarter showed that we are so far 112,000 dwelling units behind the optimistic target set by the National Housing Accord back in mid-2024, and the gap will continue to widen in the next year. Dwelling completions remain at a stagnant pace of around 175 thousand units per annum, while the target requires at least 240k pa (which is also the level that can both match demand from population growth and solve some of the structural supply issues). With accelerating construction inflation at the same time home prices are falling, abandonment rates may rise and both residential building approvals and completions are likely to decline. So, while we continue to see further home price declines through to next year, they will likely start to bounce back towards the second half of 2027 given the structural undersupply.
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