### Abstract

Computational complexity studies intractable problems like NP-complete problems, which are conjectured to require more computational resources than can be provided by the fastest computers. The intractability of this problem leads to a concrete realization of information asymmetry. Computational complexity immediately implies the existence of hard-to-price derivatives, albeit unnatural ones. Consider for example a derivative whose contract contains a 10,000 digit integer n and has a nonzero payoff if the unemployment rate next January, when rounded to the nearest integer, is the last digit of a factor of n. Computational complexity can be related to the bounded rationality concept in economics. A seller who knows he has a non-lemon would be unwilling to sell for $800, and would therefore withdraw from the market. The market would be left only with lemons, and knowing this, buyers would refuse to buy any car.

Original language | English (US) |
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Pages (from-to) | 101-107 |

Number of pages | 7 |

Journal | Communications of the ACM |

Volume | 54 |

Issue number | 5 |

DOIs | |

State | Published - May 1 2011 |

### All Science Journal Classification (ASJC) codes

- Computer Science(all)

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## Cite this

*Communications of the ACM*,

*54*(5), 101-107. https://doi.org/10.1145/1941487.1941511