# kaal:claim:1428387-037

**Claim.** Regulation targeted only at retail investors is misdirected, because incomplete and asymmetric information, bounded rationality, and moral hazard make it difficult even for professional and semi professional investors to discern the characteristics of highly complex instruments and hard-to-value assets.

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

**Holds when.**

- for highly complex financial instruments and hard-to-value assets

**Source quote.**

> Incomplete and asymmetric information, bounded rationality of decision makers and moral hazard make it difficult for professional and semi professional investors to discern the different characteristics of many highly complex financial instruments and

**From.** Kaal, *Hedge Fund Valuation Retailization, Regulation, and Investor Suitability* (2009), VI.E Level of Retail Investors Triggering Asset Allocation, page 52

**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.** retail-only-targeting  (family: investor-protection-gap)

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

**Keywords.** bounded-rationality, information-asymmetry, qualified-investors, regulatory-scope

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