A Theory of Investment Simplification and an Experiment with AI Large Language Models
springerprofessional.de
Financial markets are too complex, so investors chase simplification tools — but AI-powered solutions may just add a new layer of complexity, making the original problem recursive.
Information AsymmetryBounded RationalityComplexity TheoryCompetitive Markets
Theory Briefing
- The complexity of financial markets drives strong demand for simplified investing tools, a dynamic explored through formal theory.
- AI large language models are tested as simplification mechanisms, raising questions about whether they genuinely reduce or merely repackage complexity.
- Competition among simplification providers creates a meta-layer of complexity, illustrating how markets can undermine their own solutions.