5 Conclusion
Big data is transforming the modern economy. While many economists have used big data, fewer think about how the use of data by others affects market outcomes. This paper starts to explore the ways in which big data might be incorporated in modern economic and financial theory. One way that big data is used is to help financial market participants make more informed choices about the firms in which they invest. These investment choices affect the prices, cost of capital, and investment decisions of these firms. We set up a very simple model to show how such big data choices might be incorporated and one way in which the growth of big data might affect the real economy. But this is only a modest first step. One might also consider how firms themselves use data, to refine their products, to broaden their customer market, or to increase the efficiency of their operations. Such data, produced as a by-product of economic activity, might also favor the large firms whose abun dant economic activity produces abundant data.
