# kaal:claim:1428387-012

**Claim.** 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.

**Type.** failure  **Support.** argued

**Holds when.**

- for administrators valuing highly complex instruments

**Source quote.**

> 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.

**From.** Kaal, *Hedge Fund Valuation Retailization, Regulation, and Investor Suitability* (2009), II.C Conflict of Interest of the Manager, page 10

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

**Verify.** sha256 of source PDF `6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202009%20-%20Hedge%20Fund%20Valuation%20Retailization%2C%20Regulation%2C%20and%20Investor%20Suitability.pdf

**Failure mode.** expertise-adverse-selection  (family: valuation-and-pricing-failure)

**Topics.** economics, risk-and-incentives

**Keywords.** adverse-selection, independent-administrator, expertise, labor-market-incentives

**Canonical form.** This markdown file is the canonical hashed representation of the claim. Its sha256 is the content hash used for attestation.