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Aiming for the Goal: Contribution Dynamics of Crowdfunding

Author

Listed:
  • Joyee Deb
  • Aniko Oery
  • Kevin R. Williams
Abstract
We study a dynamic contribution game where investors seek private benefits that are offered in exchange for contributions and a single, publicly-minded donor values project success. We show that donor contributions serve as costly signals that encourage socially-productive contributions by investors who face a coordination problem. Investors and the donor prefer different equilibria but all benefit in expectation from the donor’s ability to dynamically signal his valuation. We explore various contexts in which our model can be applied and delve empirically into the case of Kickstarter. We calibrate our model and quantify the coordination benefits of dynamic signaling in counterfactuals.

Suggested Citation

  • Joyee Deb & Aniko Oery & Kevin R. Williams, 2019. "Aiming for the Goal: Contribution Dynamics of Crowdfunding," NBER Working Papers 25881, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:25881
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    References listed on IDEAS

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    Cited by:

    1. Matthew Ellman & Michele Fabi, 2022. "A Theory of Crowdfunding Dynamics," Working Papers 1349, Barcelona School of Economics.
    2. Fabian Gerstmeier & Yigit Oezcelik & Michel Tolksdorf, 2023. "Rebate rules in reward-based crowdfunding: Introducing the bid-cap rule," Working Papers 202304, University of Liverpool, Department of Economics.
    3. Anton Miglo, 2022. "Theories of Crowdfunding and Token Issues: A Review," JRFM, MDPI, vol. 15(5), pages 1-28, May.
    4. Boyarchenko, Svetlana, 2021. "Inefficiency of sponsored research," Journal of Mathematical Economics, Elsevier, vol. 95(C).
    5. Gerstmeier, Fabian & Oezcelik, Yigit & Tolksdorf, Michel, 2023. "Rebate rules in reward-based crowdfunding: Introducing the bid-cap rule," VfS Annual Conference 2023 (Regensburg): Growth and the "sociale Frage" 277698, Verein für Socialpolitik / German Economic Association.

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    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D26 - Microeconomics - - Production and Organizations - - - Crowd-Based Firms
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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