òòò½Íø Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Aiming for the Goal: Contribution Dynamics of Crowdfunding
òòò½Íø Review
(pp. 3847–76)
Abstract
We study a dynamic contribution game where investors seek private benefits 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.Citation
Deb, Joyee, Aniko Öry, and Kevin R. Williams. 2024. "Aiming for the Goal: Contribution Dynamics of Crowdfunding." òòò½Íø Review 114 (12): 3847–76. DOI: 10.1257/aer.20181851Additional Materials
JEL Classification
- C73 Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
- D26 Production and Organizations: Crowd-Based Firms
- D82 Asymmetric and Private Information; Mechanism Design
- G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- L26 Entrepreneurship
- M13 New Firms; Startups