Declarative Pearl: Rigged Contracts

Over 20 years ago, Peyton Jones et al. embarked on an adventure in financial engineering with their functional pearl on “Composing Contracts”. They introduced a combinator library—a domain-specific language—for precisely describing complex financial contracts and a formal denotational semantics for computing their value, for which they briefly sketched an implementation. This paper reworks the design of their library to make the central datatype of contracts less ad-hoc by giving it a well-understood algebraic structure: the semiring. Then, interpreting a contract’s worth as a generic semiring homomorphism directly gives rise to a natural semantics for contracts, of which computing the (monetary) value is but one instance.