Attracting the Right Crowd under Asymmetric Information: A Game Theory Application to Rewards-Based Crowdfunding

In this paper, we investigate rewards-based crowdfunding as an innovative financing form for startups and firms. Based on game-theory models under asymmetric information, we test research hypotheses about the positive effects of two main campaign features: funding target and number of rewards. Furth...

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Autores principales:	Francisca Jiménez-Jiménez, Maria Virtudes Alba-Fernández, Cristina Martínez-Gómez
Formato:	article
Lenguaje:	EN
Publicado:	MDPI AG 2021
Materias:	asymmetric information game theory signaling price discrimination conditional process analysis entrepreneurship Mathematics QA1-939
Acceso en línea:	https://doaj.org/article/c7a8b060b63b4776afecfad60f2e01be
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spelling	oai:doaj.org-article:c7a8b060b63b4776afecfad60f2e01be2021-11-11T18:18:12ZAttracting the Right Crowd under Asymmetric Information: A Game Theory Application to Rewards-Based Crowdfunding10.3390/math92127572227-7390https://doaj.org/article/c7a8b060b63b4776afecfad60f2e01be2021-10-01T00:00:00Zhttps://www.mdpi.com/2227-7390/9/21/2757https://doaj.org/toc/2227-7390In this paper, we investigate rewards-based crowdfunding as an innovative financing form for startups and firms. Based on game-theory models under asymmetric information, we test research hypotheses about the positive effects of two main campaign features: funding target and number of rewards. Furthermore, we examine how and when these characteristics are effective in attracting crowdfunders, by signaling high-quality projects (target) and by pricing according to backers’ preferences (rewards). Conditional process analysis is applied to a dataset of 1613 projects launched on the Spanish platform Verkami from 2015 to 2018. As expected, our study shows that market size is positively influenced by the target and the number of rewards, separately. Further analysis gives some interesting findings. Firstly, we find significant and positive mediating roles of social networks (in the relationship between target and market size) and of backers’ preferences (between rewards and market size). Secondly, the main orientation of a campaign, commercial or social, is relevant to explain previous relationships. While high funding targets are more effective in commercial projects, a high number of rewards is more effective in the social projects. This research provides new insights into the design of optimal crowdfunding, with theoretical and empirical implications.Francisca Jiménez-JiménezMaria Virtudes Alba-FernándezCristina Martínez-GómezMDPI AGarticleasymmetric informationgame theorysignalingprice discriminationconditional process analysisentrepreneurshipMathematicsQA1-939ENMathematics, Vol 9, Iss 2757, p 2757 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	asymmetric information game theory signaling price discrimination conditional process analysis entrepreneurship Mathematics QA1-939
spellingShingle	asymmetric information game theory signaling price discrimination conditional process analysis entrepreneurship Mathematics QA1-939 Francisca Jiménez-Jiménez Maria Virtudes Alba-Fernández Cristina Martínez-Gómez Attracting the Right Crowd under Asymmetric Information: A Game Theory Application to Rewards-Based Crowdfunding
description	In this paper, we investigate rewards-based crowdfunding as an innovative financing form for startups and firms. Based on game-theory models under asymmetric information, we test research hypotheses about the positive effects of two main campaign features: funding target and number of rewards. Furthermore, we examine how and when these characteristics are effective in attracting crowdfunders, by signaling high-quality projects (target) and by pricing according to backers’ preferences (rewards). Conditional process analysis is applied to a dataset of 1613 projects launched on the Spanish platform Verkami from 2015 to 2018. As expected, our study shows that market size is positively influenced by the target and the number of rewards, separately. Further analysis gives some interesting findings. Firstly, we find significant and positive mediating roles of social networks (in the relationship between target and market size) and of backers’ preferences (between rewards and market size). Secondly, the main orientation of a campaign, commercial or social, is relevant to explain previous relationships. While high funding targets are more effective in commercial projects, a high number of rewards is more effective in the social projects. This research provides new insights into the design of optimal crowdfunding, with theoretical and empirical implications.
format	article
author	Francisca Jiménez-Jiménez Maria Virtudes Alba-Fernández Cristina Martínez-Gómez
author_facet	Francisca Jiménez-Jiménez Maria Virtudes Alba-Fernández Cristina Martínez-Gómez
author_sort	Francisca Jiménez-Jiménez
title	Attracting the Right Crowd under Asymmetric Information: A Game Theory Application to Rewards-Based Crowdfunding
title_short	Attracting the Right Crowd under Asymmetric Information: A Game Theory Application to Rewards-Based Crowdfunding
title_full	Attracting the Right Crowd under Asymmetric Information: A Game Theory Application to Rewards-Based Crowdfunding
title_fullStr	Attracting the Right Crowd under Asymmetric Information: A Game Theory Application to Rewards-Based Crowdfunding
title_full_unstemmed	Attracting the Right Crowd under Asymmetric Information: A Game Theory Application to Rewards-Based Crowdfunding
title_sort	attracting the right crowd under asymmetric information: a game theory application to rewards-based crowdfunding
publisher	MDPI AG
publishDate	2021
url	https://doaj.org/article/c7a8b060b63b4776afecfad60f2e01be
work_keys_str_mv	AT franciscajimenezjimenez attractingtherightcrowdunderasymmetricinformationagametheoryapplicationtorewardsbasedcrowdfunding AT mariavirtudesalbafernandez attractingtherightcrowdunderasymmetricinformationagametheoryapplicationtorewardsbasedcrowdfunding AT cristinamartinezgomez attractingtherightcrowdunderasymmetricinformationagametheoryapplicationtorewardsbasedcrowdfunding
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Attracting the Right Crowd under Asymmetric Information: A Game Theory Application to Rewards-Based Crowdfunding

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