Complexity can create value. At the same time, understanding more complex goods requires more of an agent’s attention. We show that equilibrium complexity is generally ine?cient when agents face competing demands on their limited attention. Because attention allocation is hump-shaped in complexity, equilibrium complexity is distorted towards inter mediate levels: well-understood goods are ine?ciently complex, whereas less well-understood goods are oversimplified. We apply our model...

A maturity wall occurs in private credit funds when the fund reaches its maturity date, where it can no longer roll over its loans. Unlike banks, which are not bound by a maturity wall, private credit funds can better incentivize borrowers, albeit at the cost of inefficient liquidation. Using a model, we show that private credit not only expands access to credit but also takes...

We study a capital reallocation problem in which  investors can enter into a new market where they compete with each other in identifying the best deals. While ex ante investors are uncertain about their relative advantage in identifying the best deals, they can devote costly resources to learning about their relative advantage in a fully flexible way. We find that investors might allocate too much or too little capital...