# Complexity

`kaal:entity:complexity`

**Status.** derived

This node is assembled mechanically from the 17 claims that carry the concept tag `complexity`. It is a roster of what the corpus says under this term. It is **not** an adjudicated definition: no single statement here has been ruled canonical, and no first-appearance call has been made. Read the claims and judge for yourself.

## Every claim under this term

17 claims across 12 works, 2010 to 2021.

**2010**

- [1558614-029](https://wulfkaal.github.io/claims/1558614-029) [failure/evidenced] *(failure mode)* -- Routine engagement in highly complex transactions lets public companies conceal risky transactions from investors and even from their own directors, which is a structural weakness in the supposedly rigorous U.S. disclosure regime.
  > Public companies that engage in highly complex transactions as a matter of course can easily conceal risky transactions from investors. Indeed, management can also conceal these transactions from the company's own direc- 160 tors.
  Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614

**2013**

- [2267560-004](https://wulfkaal.github.io/claims/2267560-004) [failure/argued] *(failure mode)* -- The institutional infrastructure for rulemaking was designed for a relatively stable society and stable economic and market environments, and it therefore fails to keep pace with rapidly evolving and increasingly complex modern markets.
  > The growing number of rule enactments, revisions, and revocations suggests that existing rules and institutional structures for rulemaking are becoming less capable of addressing the rapid pace of change.
  Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560

**2016**

- [2740477-011](https://wulfkaal.github.io/claims/2740477-011) [failure/argued] *(failure mode)* -- The rising complexity of innovation driven regulatory issues confuses political and policy makers about rapidly emerging disruptive change, which makes a coherent political and policy solution to those challenges less likely.
  > the increasing complexity of innovation-driven regulatory issues causes political and policy makers' confusion over rapidly-emerging disruptive change, making a coherent political and policy solution to these challenges less likely.
  Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477
- [2811729-010](https://wulfkaal.github.io/claims/2811729-010) [failure/evidenced] *(failure mode)* -- The complexity of unconstrained mutual fund trading has grown to the point that even leading professional analysts struggle to assess these funds' portfolios and their performance.
  > Moreover, the complexity of UMF trading has increased so much that leading analysts struggle to assess UMF portfolios and their performance.
  Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729
- [2811729-011](https://wulfkaal.github.io/claims/2811729-011) [failure/argued] *(failure mode)* -- The go anywhere features of unconstrained mutual funds impede a retail investor's ability to ascertain and understand what the fund is invested in and what risks those investments carry.
  > However, these "go anywhere" features may impede a retail investor's ability to ascertain and understand the UMF's investments, and the risks associated with those investments.
  Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729
- [2811729-012](https://wulfkaal.github.io/claims/2811729-012) [failure/argued] *(failure mode)* -- Three features make it uniquely challenging for retail investors to evaluate the risks of unconstrained mutual funds: the lack of standard benchmarks, the recent emergence of the fund type, and the diversity and complexity of the strategies and risk exposures involved.
  > the lack of standard benchmarks for UMFs, the recent emergence of UMFs as an investment asset type, and the diversity among and complexity of UMFs' strategies and risk exposures make it uniquely challenging for retail investors to evaluate the risks of investing in UMF securities.
  Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729
- [2811729-026](https://wulfkaal.github.io/claims/2811729-026) [mechanism/argued] -- Because unconstrained mutual funds share investment strategy and risk attributes with private funds, the average unconstrained fund's risk profile is substantially more complex and generally involves more risk than the average mutual fund, and is closer to that of a private fund.
  > Because of these shared investment strategy and risk attributes, the average UMF's risk profile is substantially more complex, and generally involves more risks, than the average mutual fund, and is rather more similar to that of a private fund.
  Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729
- [2811729-029](https://wulfkaal.github.io/claims/2811729-029) [failure/argued] *(failure mode)* -- Reliance on prospectuses and other disclosures by an unconstrained mutual fund that in all material respects complies with the Company Act may be insufficient to protect retail investors.
  > a reliance on prospectuses and other disclosures by a UMF that in all material respects complies with the Company Act may be insufficient to protect retail investors.
  Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729
- [2811729-039](https://wulfkaal.github.io/claims/2811729-039) [failure/argued] *(failure mode)* -- The SEC continues to rely on disclosure as the means of mitigating investor risk from unconstrained and other mutual funds irrespective of the complexity of those funds' portfolios and strategies.
  > seems to reflect the SEC's continued reliance on disclosure as a means of mitigating the risks to investors from investing in UMFs and other mutual funds irrespective of the complexity of their portfolios and strategies,
  Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729

**2019**

- [3373393-037](https://wulfkaal.github.io/claims/3373393-037) [failure/argued] *(failure mode)* -- As agency relationships become more complex, a backstop for human behavior becomes necessary, and the claim that smart contract agency relationships run exactly as coded with no possibility of agent opportunism is less likely to hold in complex agency relationships.
  > As agency relationships become more complex, a backstop for human behavior in agency relationships becomes necessary.
  Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393
- [3405401-019](https://wulfkaal.github.io/claims/3405401-019) [failure/argued] *(failure mode)* -- In more complex smart contracts the counterparties cannot fully know whether the contract will do what it was programmed to do, or whether it will contain bugs or follow a logic the parties did not anticipate.
  > In other words, in more complex smart contracts, the counterparties to the contract cannot fully know if the contract will do what it was programmed to do and whether it will have bugs or otherwise follow another logic that was not anticipated by the parties to the contract.
  Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401
- [3405660-018](https://wulfkaal.github.io/claims/3405660-018) [failure/argued] *(failure mode)* -- The complex trading, investing and corporate structures of active international hedge funds are a major constraint on effective prudential supervision.
  > One of the major constraining factors that constricts effective prudential supervision of hedge funds is the complex trading-, investing- and corporate structure of active international hedge funds.
  Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660
- [3441904-028](https://wulfkaal.github.io/claims/3441904-028) [failure/argued] *(failure mode)* -- The notion that smart contract agency relationships run exactly as coded with no possibility of agent opportunism is less likely to hold in complex agency relationships, so a decentralized human backstop to code becomes necessary as those relationships grow more complex.
  > The notion that agency relationships in smart contracts run exactly as coded without any possibility of opportunistic behavior of the agent is less likely to uphold in complex agency relationships.
  Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904

**2021**

- [3782210-004](https://wulfkaal.github.io/claims/3782210-004) [failure/argued] *(failure mode)* -- Strict legal enforcement becomes impossible once a market is sufficiently complex and dynamic, because law cannot keep pace with the creative contracts that leading experts continually invent.
  > Strict legal enforcement is not pos- sible when the market becomes sufficiently complex and dynamic—laws cannot keep up with the creative contracts that arise when leading experts are continually improv- ing business arrangements.
  Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210
- [3782214-016](https://wulfkaal.github.io/claims/3782214-016) [failure/argued] *(failure mode)* -- Rigid code is law contracts must become extremely complex to cover the eventualities of real business situations, and bugs or hacks can never be certainly precluded in any programmable contract.
  > Moreover, rigid "code is law" smart contracts will need to be extremely complex to account for the many possible eventualities of practical business situations. The insurmountable reality is that bugs or hacks can never be certainly precluded in any programmable contract.
  Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214
- [3782220-008](https://wulfkaal.github.io/claims/3782220-008) [mechanism/argued] -- The intuition that strengthening one pole of a value pair necessarily diminishes its opposite is plainly false in any complex situation.
  > Each pair of values is in tension with its opposite. It is natural to imagine that strengthening one diminishes its opposite. But that is plainly false in any complex sit- uation.
  Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220
- [3808873-015](https://wulfkaal.github.io/claims/3808873-015) [mechanism/argued] *(failure mode)* -- Unintentional methodologically centralized design features in complex decentralized systems are inevitable, because human brains naturally simplify complex systems for the sake of coherence and designers therefore reach for centralized features that increase coherence.
  > Unintentional methodologically centralized design features in complex decentralized systems are inevitable.
  Wulf A. Kaal, Decentralization Neutralizers (2021). SSRN: https://ssrn.com/abstract=3808873

## Verify

Every claim above resolves to a record carrying a verbatim source quote, the sha256 of the source PDF, and a preformatted citation. Nothing here asks to be taken on trust.

    curl -s https://wulfkaal.github.io/entities/complexity.md | sha256sum

**Canonical form.** This markdown file is the canonical hashed representation of this entity node. Its sha256 is the content hash.