Economic externalities of autocomplete: Empirical analysis of financial markets

Individuals increasingly rely on automatic mechanisms to suggest quick completion of their input text. In this research we test for such an interface's economic effects. Theory on exploratory behavior suggests that exposure to text alternatives can facilitate diversion of the users from their initially intended text to the new terms that appear in the domain and become available. We analyze whether such diversions make an economic impact in terms of transaction loss. We test our hypotheses in the context of the financial industry by analyzing changes in turnover following the introduction of a new security (ticker). Consistent with our hypothesis, upon ticker introduction, turnover of securities that are syntactically similar to the new introduced security is significantly reduced, by 3%-5%, around the starting day of trade of the new security. These results support the notion that the practice of providing text alternatives as an interface can make a significant economic impact.