AI, Opinion Ecosystems, and Finance

Generative AI use for content generation is associated with divergent outcomes on different financial social media platforms: indications of reasoning enhancement on Seeking Alpha, and of belief distortions on WallStreeterBets. On Seeking Alpha, adoption is associated with information frictions. AI-assisted postings tilt toward analysis/credibility, and their sentiment positively predicts future returns. Use of AI is associated with more informative retail order flow and lower bid-ask spreads. In contrast, AI adoption on WallStreeterBets follows surges in retail buying, and AI-assisted content is associated with emotionality and sentiment contagion. Such content precedes higher trading volume, greater volatility, and more lottery-like return distributions.

Link to Xiaoyan  Zhang: https://sites.google.com/view/xiaoyanzhang/