Abstract
Much has been studied about the role of the market in information aggregation. This paper argues that a well-designed contract in general, and some simple affine contract under standard conditions in specific, could play a similar role. Our results revisit a simple question: When a group of investors with dispersed private information simultaneously invest in a risky project, how should they divide the project payoff? The results also shed new light on institution-market relationships and provide potential guidance for several emerging FinTech applications.
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