Rio · 4.1

The investment committee becomes a market

Fund governance exists to contain one problem: the people who decide are not the people who bear the loss. Key-person clauses, clawbacks and advisory committees reduce that problem. None of them removes it.

A decision market does. Anyone who wants to influence an allocation has to trade, which makes them a principal with something at stake. Cheap talk is worthless and positions are costly.1

Markets do not block capital formation either; they reprice it. Proposals rejected at bad terms get resubmitted at fair ones, and pass.2

Markets are a sensory apparatus, not a constitution. We read price as evidence, never as the goal.3