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The Role of Information Density in Infrastructure Investment

TitleThe Role of Information Density in Infrastructure Investment
Publication TypeWorking Paper
Year of Publication2014
AuthorsSharma, R, Knight, E

The twentieth century witnessed an extraordinary flow of institutional investment into urban
infrastructure. Notwithstanding this, the demand for infrastructure projects exceeds supply of
skills and capital. With this disconnect as a backdrop we develop a model of information flow
to examine how financial assets are transacted over time and space. Specifically, we build on
conceptualisations of ‘information content’ from Clark and O’Connor (1997) to propose a
way of theorising ‘information density’. We apply this specifically to infrastructure
investment and find four ways in which infrastructure investment is highly dense. This relates
to asset-level definitions in infrastructure, opacity with respect to how products are
securitised, high variance in investment performance, and high relational and investment
expertise. We draw on a large qualitative sample of 53 in-depth interviews, which we validate
with quantitative data, to support our findings.