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Hedging the Singularity

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  • Andrew Y. Chen

Abstract

AI stocks trade at extraordinary valuations. We develop an asset pricing model in which investors use AI stocks to hedge against an AI singularity that displaces their consumption. Because markets are incomplete -- investors cannot trade private AI capital -- AI stocks command a premium. Market incompleteness distorts both valuations and the efficient development of AI, creating a rationale for government transfers that becomes compelling when singularity-driven growth overwhelms deadweight costs. This paper was generated by AI, using https://github.com/chenandrewy/ralph-wiggum-asset-pricing/.

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  • Andrew Y. Chen, 2026. "Hedging the Singularity," Papers 2604.16997, arXiv.org.
    • Handle: RePEc:arx:papers:2604.16997
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    References listed on IDEAS

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    1. Anton Korinek & Donghyun Suh, 2024. "Scenarios for the Transition to AGI," NBER Working Papers 32255, National Bureau of Economic Research, Inc.
    2. William D. Nordhaus, 2021. "Are We Approaching an Economic Singularity? Information Technology and the Future of Economic Growth," American Economic Journal: Macroeconomics, American Economic Association, vol. 13(1), pages 299-332, January.
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