Skill Acquisition and Information Sales

      We develop an information-sales model in which investors acquire costly skills to interpret
the purchased data. Because both information and trading skills are limited
resources, data providers and skilled investors share the gains generated from trading
on the purchased information. Information quality is characterized by clarity and
accuracy, both of which are controlled by the information seller. When the seller produces
very precise information, she adds personalized noise to the sold data; when she
produces imprecise information, she sells data “as is.” Our analysis shows that the
asset management industry and the information industry tend to foster each other.
Nonetheless, the development of both industries does not necessarily improve price in-
formativeness. Finally, our analysis makes predictions about other important variables
such as information accuracy and information prices.