The European Central Bank has published a working paper, reflecting the authors’ views rather than those of the ECB, on how information about peers’ artificial intelligence investment shapes firms’ own plans to invest in AI. Based on a field experiment embedded in the Survey on the Access to Finance of Enterprises, covering about 3,300 firms across 12 European Union countries in the fourth quarter of 2025, the paper finds that firms systematically underestimate AI investment by comparable firms at home and abroad. When given accurate data on peer investment, firms revised up their expectations for future AI adoption and increased their own planned AI investment, but the behavioral effect came mainly from beliefs about domestic peers rather than foreign ones. The paper finds strong within-country strategic complementarities in AI investment. A 1 percentage point increase in the expected share of domestic competitors investing in AI raised a firm’s own expected AI investment rate by 0.570 percentage points, while the corresponding effect from expected foreign competitor investment was statistically insignificant. Treated firms expected to allocate 10.13% of their investment to AI over the next 12 months, compared with 8.33% in the control group. The information treatment also lifted domestic posterior beliefs by 4.3 percentage points and foreign posterior beliefs by 3.3 percentage points. Across the 12-country sample, the share of firms investing in AI by June 2025 averaged about 28%, ranging from 20% in Greece to 48% in Austria. The authors argue that the results point to limited cross-border innovation spillovers even within an integrated European market and suggest that informational frictions may contribute to underinvestment in AI. They conclude that financial incentives alone may not be enough to speed diffusion, and that information campaigns or other measures improving firms’ awareness of peer adoption could complement support policies.
European Central Bank2026-06-16
European Central Bank publishes working paper finding firms react to domestic but not foreign peer AI investment
The European Central Bank has published a working paper, representing the authors’ views, finding that firms underestimate peers’ AI investment and increase their own planned AI spending when given accurate information. The effect is driven by domestic peers, with a 1 percentage point rise in expected domestic peer adoption increasing a firm’s own expected AI investment rate by 0.570 percentage points, while foreign peer effects were not statistically significant. Treated firms planned to allocate 10.13% of investment to AI versus 8.33% in the control group.