How does investors' heterogeneous trust affect the complexity of financial products? A look into the development of online finance

Abstract

We introduce "trusting effects" to market complexity strategy and, through modeling, measure the decision-making behavior of financial institutions' complexity choices as online and offline finance develops into different stages. We find that the complexity of financial products is not only determined by the intrinsic value and structure of products but also largely influenced by the behavior of investors. In addition, the characteristics of financial institutions, as well as different investor structures, also affect the complexity of the products and the equilibrium. Therefore, financial institutions attempt to exploit investors' biases and cognitive limitations through complexity strategies and ultimately obtain excess returns.

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Effective allocation of financial services intensity and its impact on channel competition

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