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Hans Peter Grüner
Christoph Siemroth
University of Mannheim
2016
Cutting out the Middleman: Crowdinvesting, Efficiency, and Inequality

The authors show how decentralized individual investments can efficiently allocate capital to innovating firms. They consider consumers with privately known but correlated consumption preferences who also act as investors. Consumers identify worthwhile investment opportunities based on their own preferences and invest in firms whose product they like.