The One-Shot Crowdfunding Game.

Abstract

Society uses the following game to decide on the supply of a public good. Each agent can choose whether or not to contribute to the good. Contributions are collected and the good is supplied whenever total contributions exceed a threshold. We study the case where the public good is excludable, agents have a common value and each agent receives a private signal about the common value. This game models a standard crowdfunding setting as it is executed in popular crowdfunding platforms such as Kickstarter and Indiegogo. We study how well crowdfunding performs from the firm's perspective, in terms of market penetration, and how it performs from the perspective of society, in terms of efficiency.

Sequential Fundraising and Mutual Insurance

“…Another related line of work is the literature that studies crowdfunding [Alaei et al, 2016, Strausz, 2017, Arieli et al, 2018. In [Strausz, 2017], the author studied the robustness of crowdfunding campaigns to moral hazard and charaterizes the conditions under which crowdfunding campaigns are resilient to entrepreneurial abuse.…”

“…Due to this, our model can be applied to other cases, such as sequential voting and group buy. [Arieli et al, 2018] presented a static model of crowdfunding, in which agent signals are binary, and show that agent participation is affected by the decision of their colleagues, when the population size is sufficiently large. They use the term "social insurance", roughly in the meaning used in this paper.…”