IDEAS home Printed from https://ideas.repec.org/p/cwl/cwldpp/2149r2.html
   My bibliography  Save this paper

Aiming for the Goal: Contribution Dynamics of Crowdfunding

Author

Abstract

Fundraising campaigns draw support from a wide pool of contributors. Some contributors are interested in private rewards offered in exchange for contributions (buyers), whereas others are publicly-minded and value success (donors). Buyers face a coordination problem because of the positive externalities of campaign success. A leadership donor who strategically times contributions can promote coordination by dynamically signaling his valuation. The ability to signal increases the probability of success and benefits all participants relative to the donor valuation being known. We validate our modeling assumptions and theoretical predictions using Kickstarter data.

Suggested Citation

  • Joyee Deb & Aniko Oery & Kevin R. Williams, 2018. "Aiming for the Goal: Contribution Dynamics of Crowdfunding," Cowles Foundation Discussion Papers 2149R2, Cowles Foundation for Research in Economics, Yale University, revised Feb 2023.
    • Handle: RePEc:cwl:cwldpp:2149r2
    as

    Download full text from publisher

    File URL: https://cowles.yale.edu/sites/default/files/2023-03/D2149R2.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Fudenberg, Drew & Tirole, Jean, 1991. "Perfect Bayesian equilibrium and sequential equilibrium," Journal of Economic Theory, Elsevier, vol. 53(2), pages 236-260, April.
    2. Leslie M. Marx & Steven A. Matthews, 2000. "Dynamic Voluntary Contribution to a Public Project," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(2), pages 327-358.
    3. Kolb, Aaron M., 2019. "Strategic real options," Journal of Economic Theory, Elsevier, vol. 183(C), pages 344-383.
    4. Hans Peter Grüner & Christoph Siemroth, 2019. "Crowdfunding, Efficiency, and Inequality," Journal of the European Economic Association, European Economic Association, vol. 17(5), pages 1393-1427.
    5. James Andreoni, 1998. "Toward a Theory of Charitable Fund-Raising," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1186-1213, December.
    6. John A. List & David Lucking-Reiley, 2002. "The Effects of Seed Money and Refunds on Charitable Giving: Experimental Evidence from a University Capital Campaign," Journal of Political Economy, University of Chicago Press, vol. 110(1), pages 215-233, February.
    7. Heski Bar-Isaac, 2003. "Reputation and Survival: Learning in a Dynamic Signalling Model," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 231-251.
    8. Jen-Wen Chang, 2020. "The Economics of Crowdfunding," American Economic Journal: Microeconomics, American Economic Association, vol. 12(2), pages 257-280, May.
    9. Samuel Lee & Petra Persson, 2016. "Financing from Family and Friends," The Review of Financial Studies, Society for Financial Studies, vol. 29(9), pages 2341-2386.
    10. Jeroen M. Swinkels, 1999. "Education Signalling with Preemptive Offers," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(4), pages 949-970.
    11. Ajay Agrawal & Christian Catalini & Avi Goldfarb, 2015. "Crowdfunding: Geography, Social Networks, and the Timing of Investment Decisions," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 24(2), pages 253-274, June.
    12. Mark Bagnoli & Barton L. Lipman, 1989. "Provision of Public Goods: Fully Implementing the Core through Private Contributions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 56(4), pages 583-601.
    13. 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.
    14. Matthew Ellman & Michele Fabi, 2022. "A Theory of Crowdfunding Dynamics," Working Papers 1349, Barcelona School of Economics.
    15. Brendan Daley & Brett Green, 2012. "Waiting for News in the Market for Lemons," Econometrica, Econometric Society, vol. 80(4), pages 1433-1504, July.
    16. 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.
    17. 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. Joyee Deb & Aniko Oery & Kevin R. Williams, 2018. "Aiming for the Goal: Contribution Dynamics of Crowdfunding," Cowles Foundation Discussion Papers 2149R, Cowles Foundation for Research in Economics, Yale University, revised Jan 2021.
    2. Erik Ansink & Mark Koetse & Jetske Bouma & Dominic Hauck & Daan van Soest, 2017. "Crowdfunding public goods: An experiment," Tinbergen Institute Discussion Papers 17-119/VIII, Tinbergen Institute.
    3. Cason, Timothy N. & Zubrickas, Robertas, 2019. "Donation-based crowdfunding with refund bonuses," European Economic Review, Elsevier, vol. 119(C), pages 452-471.
    4. Ellman, Matthew & Hurkens, Sjaak, 2019. "Optimal crowdfunding design," Journal of Economic Theory, Elsevier, vol. 184(C).
    5. Siemroth, Christoph & Hornuf, Lars, 2023. "Why Do Retail Investors Pick Green Investments? A Lab-in-the-Field Experiment with Crowdfunders," Journal of Economic Behavior & Organization, Elsevier, vol. 209(C), pages 74-90.
    6. 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).
    7. 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.
    8. Sha Zhou & Tao Ma & Zhengchi Liu, 2021. "Crowdfunding as a screener for collective investment," Electronic Commerce Research, Springer, vol. 21(1), pages 195-221, March.
    9. Eric Tassel, 2023. "Crowdfunding investors, intermediaries and risky entrepreneurs," Small Business Economics, Springer, vol. 60(3), pages 1033-1050, March.
    10. Cason, Timothy N. & Tabarrok, Alex & Zubrickas, Robertas, 2021. "Early refund bonuses increase successful crowdfunding," Games and Economic Behavior, Elsevier, vol. 129(C), pages 78-95.
    11. 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.
    12. Zvilichovsky, David & Danziger, Shai & Steinhart, Yael, 2018. "Making-the-Product-Happen: A Driver of Crowdfunding Participation," Journal of Interactive Marketing, Elsevier, vol. 41(C), pages 81-93.
    13. Sylvain Dejean, 2020. "The role of distance and social networks in the geography of crowdfunding: evidence from France," Regional Studies, Taylor & Francis Journals, vol. 54(3), pages 329-339, March.
    14. Potters, Jan & Sefton, Martin & Vesterlund, Lise, 2005. "After you--endogenous sequencing in voluntary contribution games," Journal of Public Economics, Elsevier, vol. 89(8), pages 1399-1419, August.
    15. Besancenot, Damien & Vranceanu, Radu, 2018. "Crowdfunding with overenthusiastic investors : a global game model," ESSEC Working Papers WP1802, ESSEC Research Center, ESSEC Business School.
    16. Georgiadis, George, 2017. "Deadlines and infrequent monitoring in the dynamic provision of public goods," Journal of Public Economics, Elsevier, vol. 152(C), pages 1-12.
    17. Gilles Chemla & Katrin Tinn, 2020. "Learning Through Crowdfunding," Management Science, INFORMS, vol. 66(5), pages 1783-1801, May.
    18. Susanne Goldlücke & Thomas Tröger, 2018. "Assigning an unpleasant task without payment," CRC TR 224 Discussion Paper Series crctr224_2018_003, University of Bonn and University of Mannheim, Germany.
    19. Fabrice Hervé & Armin Schwienbacher, 2018. "Crowdfunding And Innovation," Journal of Economic Surveys, Wiley Blackwell, vol. 32(5), pages 1514-1530, December.
    20. Marina Halac & Ilan Kremer, 2020. "Experimenting with Career Concerns," American Economic Journal: Microeconomics, American Economic Association, vol. 12(1), pages 260-288, February.

    More about this item

    Keywords

    Crowdfunding; Contribution Games; Dynamic Models; Kickstarter; Leadership Donor;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

    Statistics

    Access and download statistics

    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:cwl:cwldpp:2149r2. 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: Brittany Ladd (email available below). General contact details of provider: https://edirc.repec.org/data/cowleus.html .

    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.