The Economics of Crowdfunding Platforms

This paper provides a description of the crowdfunding sector, considering investment- based crowdfunding platforms as well as platforms in which funders do not obtain monetary payments. It lays out key features of this quickly developing sector and explores the economic forces at play that can explain the design of these platforms. In particular, it elaborates on cross-group and within-group external effects and asymmetric information on crowdfunding platforms.

[1]  Grazia Cecere,et al.  Crowdfunding and social influence: an empirical investigation , 2017 .

[2]  Adrien B. Taylor,et al.  Smooth strongly convex interpolation and exact worst-case performance of first-order methods , 2015, Mathematical Programming.

[3]  M. Puri,et al.  Adverse Incentives in Crowdfunding , 2014, Manag. Sci..

[4]  Jacques-François Thisse,et al.  Toward a Theory of Monopolistic Competition , 2014, J. Econ. Theory.

[5]  Jason A. Duan,et al.  Network Externalities in Collaborative Consumption: Theory, Experiment, and Empirical Investigation of Crowdfunding , 2016 .

[6]  C. Hafner,et al.  A simple model for now-casting volatility series , 2016 .

[7]  François Maniquet,et al.  Social ordering functions , 2016 .

[8]  Praveen Kumar,et al.  (Crowd)Funding Innovation: Financing Constraints, Price Discrimination and Welfare , 2016 .

[9]  C. d'Aspremont,et al.  Oligopolistic vs. monopolistic competition: Do intersectoral effects matter? , 2016 .

[10]  Thierry Bréchet,et al.  Domestic environmental policy and international cooperation for global commons , 2016 .

[11]  Alexander White,et al.  Insulated Platform Competition , 2016 .

[12]  Nicolas Gillis,et al.  Heuristics for exact nonnegative matrix factorization , 2014, J. Glob. Optim..

[13]  Siva Viswanathan,et al.  Home Bias in Online Investments: An Empirical Study of an Online Crowdfunding Market , 2014, Manag. Sci..

[14]  Konrad Stahl,et al.  Market Transparency, Adverse Selection, and Moral Hazard , 2013, Journal of Political Economy.

[15]  Rajkamal Iyer,et al.  Screening Peers Softly: Inferring the Quality of Small Borrowers , 2009, Manag. Sci..

[16]  L. Simar,et al.  The “wrong skewness” problem in stochastic frontier models: A new approach , 2018 .

[17]  Ali Ridha Mahjoub,et al.  Strongly polynomial bounds for multiobjective and parametric global minimum cuts in graphs and hypergraphs , 2015, Mathematical Programming.

[18]  Mia Gray,et al.  Moving Mainstream: Benchmarking the European Alternative Finance Market , 2015 .

[19]  B. Bayus,et al.  Crowdfunding Creative Ideas: The Dynamics of Project Backers in Kickstarter , 2015 .

[20]  Maurice Queyranne,et al.  Optimal pits and optimal transportation , 2015 .

[21]  Luc Bauwens,et al.  Autoregressive Moving Average Infinite Hidden Markov-Switching Models , 2015 .

[22]  Craig R. Everett.  Group Membership, Relationship Banking and Loan Default Risk: The Case of Online Social Lending , 2015 .

[23]  Yong Lu,et al.  Friendship in Online Peer-to-Peer Lending: Pipes, Prisms, and Relational Herding , 2015, MIS Q..

[24]  A. Gautier,et al.  Optimal enforcement of competition policy: the commitments procedure under uncertainty , 2015 .

[25]  A. Gautier,et al.  Competing One-Way Essential Complements: The Forgotten Side of Net Neutrality , 2015 .

[26]  François Maniquet,et al.  Optimal taxation theory and principles of fairness , 2015 .

[27]  Y. Nesterov,et al.  Algorithm of Price Adjustment for Market Equilibrium , 2015 .

[28]  B. Clarysse,et al.  Does the Possibility to Make Equity Investments in Crowdfunding Projects Crowd Out Reward–Based Investments? , 2015 .

[29]  Blakley C. Davis,et al.  Crowdfunding in a Prosocial Microlending Environment: Examining the Role of Intrinsic versus Extrinsic Cues , 2015 .

[30]  Adair Morse.  Peer-to-Peer Crowdfunding: Information and the Potential for Disruption in Consumer Lending , 2015 .

[31]  Anindya Ghose,et al.  The Hidden Cost of Accommodating Crowdfunder Privacy Preferences: A Randomized Field Experiment , 2014, Manag. Sci..

[32]  Jean Hindriks,et al.  Quel avenir pour nos pensions ? Les grands défis de la réforme des pensions , 2015 .

[33]  Daniel J. Brass,et al.  Friendships in Online Peer-to-Peer Lending: Pipes, Prisms, and Relational Herding , 2015 .

[34]  F. Tardella,et al.  Helly and Radon Numbers for Sublattice Convexities , 2015 .

[35]  Hadar Gafni,et al.  Gender Dynamics in Crowdfunding (Kickstarter): Evidence on Entrepreneurs, Investors, Deals and Taste-Based Discrimination , 2016 .

[36]  Jean Hindriks,et al.  Back to school, back to segregation ? , 2014 .

[37]  Yukihiro Nishimura,et al.  On the timing of tax and investment in fiscal competition models , 2014 .

[38]  François Maniquet,et al.  Echelles d'équivalence du temps de travail: évaluation de l'impôt sur le revenu en Belgique à la lumière de l'éthique de la responsabilité , 2014 .

[39]  Mathieu Van Vyve,et al.  Securely Solving Classical Network Flow Problems , 2014, ICISC.

[40]  Dongyu Chen,et al.  A trust model for online peer-to-peer lending: a lender’s perspective , 2014, Inf. Technol. Manag..

[41]  Yukai Yang,et al.  Specification, estimation and evaluation of vector smooth transition autoregressive models with applications , 2014 .

[42]  Henry Tulkens.  Internal vs. core coalitional stability in the environmental externality game: A reconciliation , 2014 .

[43]  Luc Bauwens,et al.  Forecasting Comparison of Long Term Component Dynamic Models for Realized Covariance Matrices , 2014 .

[44]  Manuela Braione,et al.  Construction of Value at-Risk forecasts under different distributional assumptions within a BEKK framework , 2014 .

[45]  V. Ginsburgh,et al.  Colonial legacy, linguistic disenfranchisement and the civil conflict in Sri Lanka , 2014 .

[46]  Victor Ginsburgh,et al.  Foreign language learnings: An econometric analysis , 2014 .

[47]  Jacques-François Thisse,et al.  Does technological progress affect the location of economic activity , 2014 .

[48]  Dirk Neumann,et al.  Does the Choice of Well-Being Measure Matter Empirically? An Illustration with German Data , 2014, SSRN Electronic Journal.

[49]  P. Mongin,et al.  Judgment Aggregation Theory Can Entail New Social Choice Results , 2014 .

[50]  Armin Schwienbacher,et al.  Crowdinvesting – Angel Investing for the Masses? , 2014 .

[51]  Gregory D. Saxton,et al.  The Social Network Effect , 2014 .

[52]  A. Ghose,et al.  Cultural Differences and Geography as Determinants of Online Prosocial Lending , 2014, MIS Q..

[53]  Paul Belleflamme,et al.  Crowdfunding: Some Empirical Findings and Microeconomic Underpinnings , 2014 .

[54]  Yukai Yang,et al.  Linearity and misspecification tests for vector smooth transition regression models , 2014 .

[55]  Ning Chen,et al.  Auctions for social lending: A theoretical analysis , 2014, Games Econ. Behav..

[56]  Soong Moon Kang,et al.  Field experiments of success-breeds-success dynamics , 2014, Proceedings of the National Academy of Sciences.

[57]  Dongyu Chen,et al.  Rational or Irrational Herding in Online Microloan Markets: Evidence from China , 2014 .

[58]  Markus Reisinger.  Two-Part Tariff Competition between Two-Sided Platforms , 2014 .

[59]  Rimantas Gatautis,et al.  Crowdsourcing Application in Marketing Activities , 2014 .

[60]  Yishay Mansour,et al.  Implementing the “Wisdom of the Crowd” , 2013, Journal of Political Economy.

[61]  Avi Goldfarb,et al.  Some Simple Economics of Crowdfunding , 2013, Innovation Policy and the Economy.

[62]  Ethan Mollick.  The Dynamics of Crowdfunding: An Exploratory Study , 2014 .

[63]  Alexander Benlian,et al.  Understanding the Dynamic Interplay of Social Buzz and Contribution Behavior within and between Online Platforms - Evidence from Crowdfunding , 2014, ICIS.

[64]  Ohad Barzilay,et al.  Playing Both Sides of the Market: Success and Reciprocity on Crowdfunding Platforms , 2015, ICIS.

[65]  Anindya Ghose,et al.  An Empirical Examination of Users' Information Hiding in a Crowdfunding Context , 2013, ICIS.

[66]  J. Short,et al.  The effect of entrepreneurial rhetoric on microlending investment: : An examination of the warm-glow effect , 2013 .

[67]  Jacques-François Thisse,et al.  Economics of Agglomeration: Cities, Industrial Location, and Globalization , 2013 .

[68]  Ethan Mollick,et al.  The Dynamics of Crowdfunding: Determinants of Success and Failure , 2013 .

[69]  A. Ghose,et al.  An Empirical Examination of the Antecedents and Consequences of Contribution Patterns in Crowd-Funded Markets , 2013, Inf. Syst. Res..

[70]  Siva Viswanathan,et al.  Judging Borrowers by the Company They Keep: Friendship Networks and Information Asymmetry in Online Peer-to-Peer Lending , 2011, Manag. Sci..

[71]  R. H. Smith,et al.  The Experts in the Crowd: The Role of Reputable Investors in a Crowdfunding Market , 2013 .

[72]  Paul Belleflamme,et al.  Crowdfunding: Tapping the Right Crowd , 2013, SSRN Electronic Journal.

[73]  Lance A. Young,et al.  Trust and Credit: The Role of Appearance in Peer-to-peer Lending , 2012 .

[74]  François Maniquet,et al.  Equality Of Opportunity: The Economics Of Responsibility , 2012 .

[75]  Peng Liu,et al.  Rational Herding in Microloan Markets , 2012, Manag. Sci..

[76]  L. Bauwens,et al.  Handbook of Volatility Models and Their Applications: Bauwens/Handbook of Volatility Models and Their Applications , 2012 .

[77]  Jacques-François Thisse,et al.  Economic Geography and the Unequal Development of Regions , 2012 .

[78]  Justin R. Sydnor,et al.  What's in a Picture?: Evidence of Discrimination from Prosper.com , 2012 .

[79]  D. Cumming,et al.  The Oxford Handbook of Entrepreneurial Finance , 2012 .

[80]  Oestreicher-SingerGal,et al.  Recommendation networks and the long tail of electronic commerce , 2012 .

[81]  Jeremy Michels.  Do Unverifiable Disclosures Matter? Evidence from Peer-to-Peer Lending , 2012 .

[82]  Arun Sundararajan,et al.  Recommendation Networks and the Long Tail of Electronic Commerce , 2010, MIS Q..

[83]  Catherine Tucker,et al.  Social Networks, Personalized Advertising, and Privacy Controls , 2013 .

[84]  Byungtae Lee,et al.  Herding behavior in online P2P lending: An empirical investigation , 2012, Electron. Commer. Res. Appl..

[85]  Scott Sonenshein,et al.  Tell Me a Good Story and I May Lend You My Money: The Role of Narratives in Peer-to-Peer Lending Decisions , 2011 .

[86]  G. Jin,et al.  Learning by Doing with Asymmetric Information: Evidence from Prosper.Com , 2011 .

[87]  E. Berkovich,et al.  Search and herding effects in peer-to-peer lending: evidence from prosper.com , 2011 .

[88]  Juanjuan Zhang,et al.  How Does Popularity Information Affect Choices? A Field Experiment , 2009 .

[89]  Volker Nocke,et al.  Advance-Purchase Discounts as a Price Discrimination Device , 2008, J. Econ. Theory.

[90]  J. Hemer.  A snapshot on crowdfunding , 2011 .

[91]  E. Schokkaert,et al.  Empirical Social Choice , 2011 .

[92]  E. Gerber,et al.  Crowdfunding : Why People Are Motivated to Post and Fund Projects on Crowdfunding Platforms , 2011 .

[93]  Jeff Galak,et al.  Microfinance Decision Making: A Field Study of Prosocial Lending , 2010 .

[94]  Hui Wang,et al.  Building Consumer-to-Consumer Trust in E-Finance Marketplaces: An Empirical Analysis , 2010, Int. J. Electron. Commer..

[95]  Armin Schwienbacher,et al.  Crowdfunding of Small Entrepreneurial Ventures , 2010 .

[96]  Emilio Calvano,et al.  Pricing Payment Cards , 2010, SSRN Electronic Journal.

[97]  Gregor N. F. Weiß,et al.  Mitigating Adverse Selection in P2P Lending – Empirical Evidence from Prosper.com , 2010 .

[98]  Rick L. Andrews,et al.  Strategic Herding Behavior in Peer-to-Peer Loan Auctions , 2010 .

[99]  Markus Reisinger.  Unique Equilibrium in Two-Part Tariff Competition between Two-Sided Platforms , 2010 .

[100]  Paul Belleflamme,et al.  Industrial Organization: Markets and Strategies , 2010 .

[101]  Gary D. Thompson,et al.  Does Paying Referees Expedite Reviews?: Results of a Natural Experiment , 2010 .

[102]  Andrew Postlewaite,et al.  Strategic Firms and Endogenous Consumer Emulation , 2008 .

[103]  Eliseo Díaz González,et al.  Intermediate Public Economics , 2007 .

[104]  J. Rochet,et al.  Two-sided markets: a progress report , 2006 .

[105]  Luís M. B. Cabral,et al.  The Dynamics of Seller Reputation: Evidence from Ebay , 2006 .

[106]  Nigar Hashimzade,et al.  Solutions Manual to Accompany Intermediate Public Economics , 2006 .

[107]  Aaron Schiff,et al.  Simple Reputation Systems , 2005 .

[108]  David S. Evans,et al.  The Industrial Organization of Markets with Two-Sided Platforms , 2005 .

[109]  M. Armstrong.  Competition in Two-Sided Markets ¤ , 2005 .

[110]  M. Rabin,et al.  A Model of Reference-Dependent Preferences , 2006 .

[111]  Ettore Damiano,et al.  Competing Matchmaking , 2004 .

[112]  R. Amir.  Supermodularity and Complementarity in Economics: An Elementary Survey , 2003 .

[113]  J. Rochet,et al.  Platform competition in two sided markets , 2003 .

[114]  Stephen M. Garcia,et al.  Crowded Minds : The Implicit Bystander Effect , 2002 .

[115]  Greg Barron,et al.  Private e-mail requests and the diffusion of responsibility , 2002, Comput. Hum. Behav..

[116]  B. Frey,et al.  Motivation crowding theory , 2001 .

[117]  A. Lizzeri,et al.  Strategic Certification and Provision of Quality , 2001 .

[118]  A. Lizzeri.  Information revelation and certification intermediaries , 1999 .

[119]  Gary Biglaiser,et al.  Middlemen as Experts , 1993 .

[120]  A. Banerjee,et al.  A Simple Model of Herd Behavior , 1992 .

[121]  Andrew Postlewaite,et al.  Strategic Information Revelation , 1990 .

[122]  B. Weisbrod,et al.  Demand for Collective Goods in Private Nonprofit Markets: Can Fundraising Expenditures Help Overcome Free-Rider Behavior? , 1986 .

[123]  C. Shapiro,et al.  Network Externalities, Competition, and Compatibility , 1985 .

[124]  Sanford J. Grossman.  The Informational Role of Warranties and Private Disclosure about Product Quality , 1981, The Journal of Law and Economics.

[125]  Paul R. Milgrom,et al.  Good News and Bad News: Representation Theorems and Applications , 1981 .

[126]  A. Tversky,et al.  Prospect theory: analysis of decision under risk , 1979 .