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Does AI substantially improve human decision-making in financial markets?

Determine whether deploying artificial intelligence systems, specifically large language models used for financial statement analysis, can substantially improve human decision-making in real-world financial markets. Assess the practical impact of integrating LLM-generated analyses on decision quality and outcomes for investors and analysts in live market settings.

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Background

The paper investigates whether LLMs can perform financial statement analysis using only standardized, anonymized balance sheets and income statements to predict the direction of future earnings. GPT-4 with chain-of-thought prompting outperforms human analysts and performs on par with specialized machine learning models, and GPT-based signals yield profitable trading strategies.

Despite these strong results, the authors caution that translating model performance into improvements in human decision-making requires evidence from practical, real-world usage. They explicitly flag as an open question whether AI can substantially improve human decision-making in financial markets, leaving this issue to future research.

References

However, whether AI can substantially improve human decision-making in financial markets in practice is still to be seen. We leave this question for future research.

Financial Statement Analysis with Large Language Models (2407.17866 - Kim et al., 25 Jul 2024) in Conclusion (Section 8)