kaal:claim:1428387-012

There is an adverse selection problem in independent valuation: an administrator who actually had the knowledge and understanding of complex instruments required for the task would probably be incentivized to use that expertise in a more profitable setting instead.

Had the administrator the required knowledge and understanding of the complexities, he or she would probably be incentivized to use that experience and understanding in a more profitable setting.

Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009), II.C Conflict of Interest of the Manager, p. 10
https://ssrn.com/abstract=1428387 · source PDF

Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387

• for administrators valuing highly complex instruments

failuresupport: arguedfailure: expertise-adverse-selectionfamily: valuation-and-pricing-failureeconomicsrisk-and-incentives

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