IDEAS home Printed from https://ideas.repec.org/a/spr/annopr/v315y2022i2d10.1007_s10479-020-03857-5.html
   My bibliography  Save this article

Online crowd-funding strategy: a game-theoretical approach to a Kickstarter case study

Author

Listed:
  • Nafisa Mahbub

    (State University of New York at Buffalo)

  • Anh Le

    (State University of New York at Buffalo)

  • Jun Zhuang

    (State University of New York at Buffalo)

Abstract

There are many factors that can inhibit the potential of promising projects from being completely funded in crowd-funding campaigns. In order to study this, a game-theoretical model is constructed to display irrational fear and help creators maximize their chances of facilitating a successful campaign. This research shows that once irrational fear is modeled along with the strategies associated with the design of the reward system, the total pledged amount for a project can be predicted in order to scheme their strategies based on the situation. For simplicity and consistency, the model is based on Kickstarter funding campaigns of physical products that are used as rewards for support. This paper discusses the influence of potential strategies for increasing the total pledge, such as modeling irrational fear and limiting rewards.

Suggested Citation

  • Nafisa Mahbub & Anh Le & Jun Zhuang, 2022. "Online crowd-funding strategy: a game-theoretical approach to a Kickstarter case study," Annals of Operations Research, Springer, vol. 315(2), pages 1019-1036, August.
    • Handle: RePEc:spr:annopr:v:315:y:2022:i:2:d:10.1007_s10479-020-03857-5
    DOI: 10.1007/s10479-020-03857-5
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10479-020-03857-5
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10479-020-03857-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gamze Nalcaci & Ayse Özmen & Gerhard Wilhelm Weber, 2019. "Long-term load forecasting: models based on MARS, ANN and LR methods," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 27(4), pages 1033-1049, December.
    2. Zhiyuan Yu & Muhammad Hafeez & Lihan Liu & Muhammad Tariq Mahmood & Hong Wu, 2019. "Evaluating the Minor Coarse Cereals Product Crowdfunding Platform through Evolutionary Game Analysis," Sustainability, MDPI, vol. 11(5), pages 1-17, March.
    3. Roland Strausz, 2017. "A Theory of Crowdfunding: A Mechanism Design Approach with Demand Uncertainty and Moral Hazard," American Economic Review, American Economic Association, vol. 107(6), pages 1430-1476, June.
    4. Jie Xu & Jun Zhuang & Zigeng Liu, 2016. "Modeling and mitigating the effects of supply chain disruption in a defender–attacker game," Annals of Operations Research, Springer, vol. 236(1), pages 255-270, January.
    5. Cuiqing Jiang & Zhao Wang & Ruiya Wang & Yong Ding, 2018. "Loan default prediction by combining soft information extracted from descriptive text in online peer-to-peer lending," Annals of Operations Research, Springer, vol. 266(1), pages 511-529, July.
    6. Ming Hu & Xi Li & Mengze Shi, 2015. "Product and Pricing Decisions in Crowdfunding," Marketing Science, INFORMS, vol. 34(3), pages 331-345, May.
    7. Zhu, Lijing & Zhang, Qi & Lu, Huihui & Li, Hailong & Li, Yan & McLellan, Benjamin & Pan, Xunzhang, 2017. "Study on crowdfunding’s promoting effect on the expansion of electric vehicle charging piles based on game theory analysis," Applied Energy, Elsevier, vol. 196(C), pages 238-248.
    8. Betül Kalaycı & Ayşe Özmen & Gerhard-Wilhelm Weber, 2020. "Mutual relevance of investor sentiment and finance by modeling coupled stochastic systems with MARS," Annals of Operations Research, Springer, vol. 295(1), pages 183-206, December.
    9. Cuihong Li & Fuqiang Zhang, 2013. "Advance Demand Information, Price Discrimination, and Preorder Strategies," Manufacturing & Service Operations Management, INFORMS, vol. 15(1), pages 57-71, September.
    10. Mike Mingcheng Wei & Fuqiang Zhang, 2018. "Advance Selling to Strategic Consumers: Preorder Contingent Production Strategy with Advance Selling Target," Production and Operations Management, Production and Operations Management Society, vol. 27(7), pages 1221-1235, July.
    11. Jun Zhuang & Gregory Saxton & Han Wu, 2014. "Publicity vs. impact in nonprofit disclosures and donor preferences: a sequential game with one nonprofit organization and N donors," Annals of Operations Research, Springer, vol. 221(1), pages 469-491, October.
    12. Jinhong Xie & Steven M. Shugan, 2001. "Electronic Tickets, Smart Cards, and Online Prepayments: When and How to Advance Sell," Marketing Science, INFORMS, vol. 20(3), pages 219-243, June.
    13. Strausz, Roland, 2017. "A Theory of Crowdfunding," Rationality and Competition Discussion Paper Series 2, CRC TRR 190 Rationality and Competition.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sun, Yanhong & Sheng, Yiyun & Yan, Shuai & Zhang, Wei, 2023. "Pricing strategies in reward-based crowdfunding: Whether to introduce price guarantee?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 170(C).
    2. Diandian Xiang & Leinan Zhang & Qiuyan Tao & Yonggui Wang & Shuang Ma, 2019. "Informational or emotional appeals in crowdfunding message strategy: an empirical investigation of backers’ support decisions," Journal of the Academy of Marketing Science, Springer, vol. 47(6), pages 1046-1063, November.
    3. Chu, Tiankuo & Wei, Xu & Zhou, Yimin, 2021. "The pricing and efficiency of pre-Sale crowdfunding," Finance Research Letters, Elsevier, vol. 40(C).
    4. Peng, Weicai & Tian, Zhongjun, 2022. "Information acquisition, selling effort and pre-order strategy," International Journal of Production Economics, Elsevier, vol. 249(C).
    5. Jiang, Zhong-Zhong & Feng, Guangqi & Yi, Zelong & Lu, Weida, 2022. "Raising funds through crowdfunding for a capital-constrained servicing manufacturer," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 164(C).
    6. Lv, Jiancheng & Bi, Gongbing & Xu, Yang, 2023. "Crowdfunding pricing and quality overstatement in the presence of platform regulation," Journal of Retailing and Consumer Services, Elsevier, vol. 70(C).
    7. Xu, Shengshuo & Ling, Liuyi & Du, Shaofu & Liu, Lindong, 2023. "Crowdfunding or traditional mode? Strategy choices in product selling," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 172(C).
    8. Felipe, Israel José dos Santos & Mendes-Da-Silva, Wesley & Leal, Cristiana Cerqueira & Braun Santos, Danilo, 2022. "Reward crowdfunding campaigns: Time-to-success analysis," Journal of Business Research, Elsevier, vol. 138(C), pages 214-228.
    9. Eric Tassel, 2023. "Crowdfunding investors, intermediaries and risky entrepreneurs," Small Business Economics, Springer, vol. 60(3), pages 1033-1050, March.
    10. Bender, Mark & Gal-Or, Esther & Geylani, Tansev, 2019. "Crowdfunding As a Vehicle for Raising Capital and for Price Discrimination," Journal of Interactive Marketing, Elsevier, vol. 46(C), pages 1-19.
    11. Yucheng Ding & Tianle Zhang, 2022. "Advance selling programs: When to introduce and what to inform consumers," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(3), pages 779-790, April.
    12. Zhan Pang & Wenqiang Xiao & Xuying Zhao, 2021. "Preorder Price Guarantee in e-Commerce," Manufacturing & Service Operations Management, INFORMS, vol. 23(1), pages 123-138, 1-2.
    13. Marco Sahm, 2020. "Advance-Purchase Financing of Projects with Few Buyers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 57(4), pages 909-933, December.
    14. Bi, Gongbing & Geng, Botao & Liu, Lindong, 2019. "On the fixed and flexible funding mechanisms in reward-based crowdfunding," European Journal of Operational Research, Elsevier, vol. 279(1), pages 168-183.
    15. Elena Belavina & Simone Marinesi & Gerry Tsoukalas, 2020. "Rethinking Crowdfunding Platform Design: Mechanisms to Deter Misconduct and Improve Efficiency," Management Science, INFORMS, vol. 66(11), pages 4980-4997, November.
    16. Carla Martínez-Climent & Ricardo Costa-Climent & Pejvak Oghazi, 2019. "Sustainable Financing through Crowdfunding," Sustainability, MDPI, vol. 11(3), pages 1-16, February.
    17. Zhang, Juan & Huang, Jian, 2020. "Deceptive advertising in a crowdfunding market," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 135(C).
    18. Xu, Lei & Li, Dahui & Chiu, Chun-Hung & Zhang, Qing & Gao, Runpeng, 2022. "Implications of warm-glow effect and risk aversion in reward-based crowdfunding," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 160(C).
    19. Ying-Ju Chen & Tinglong Dai & C. Gizem Korpeoglu & Ersin Körpeoğlu & Ozge Sahin & Christopher S. Tang & Shihong Xiao, 2020. "OM Forum—Innovative Online Platforms: Research Opportunities," Manufacturing & Service Operations Management, INFORMS, vol. 22(3), pages 430-445, May.
    20. Qiang Liu & Xiaofeng Liu & Subramanian Balachander, 2021. "Crowdfunding Project Design: Optimal Product Menu and Funding Target," Production and Operations Management, Production and Operations Management Society, vol. 30(10), pages 3800-3811, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:annopr:v:315:y:2022:i:2:d:10.1007_s10479-020-03857-5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.