LIVE MARKETS-Generative AI could make markets more efficient - DB
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GENERATIVE AI COULD MAKE MARKETS MORE EFFICIENT - DB
What can a chatbot and a hunch achieve?
According to Deutsche Bank this understated arsenal might be helping to reduce friction in the economy and make markets more efficient. They say all of that could even have a mild deflationary effect.
In a recent note delving into how AI is driving growth, DB analysts say the technology could drive market efficiency in several ways.
The first being "better matching and price discovery".
Basically the idea is that whether we are buyers, sellers, workers or employers, we can all find each other faster since we can express ourselves in "natural language" quicker, rather than relying on word of mouth, paper directories or sifting through Google search results.
All that could lead to more transparent prices as well as more personalised products and services, says DB.
Next is the fact that AI is lowering friction and risk in transactions, reducing "information asymmetry and counterparty risk."
"An entrepreneur buying legal services or a driver buying a used car is less exposed to being ripped off when they have a simple, tailored guide to understanding the jargon, assessing whether they are buying an adversely selected "lemon" and getting compensation if something goes wrong."
DB says this could lead to less fraud, fewer disputes and fairer access.
Their third rationale the idea of better knowledge sharing and coordination.
"AI tools monitoring inventory and demand can shrink the bullwhip effect, where small changes in customer behaviour cause large swings in order up the value chain."
"Codified" knowledge might spread best practice and increase the productivity of laggards, says DB.
(Lucy Raitano)
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