Crowdfunding Public Goods: An Experiment

Abstract

We assess the impact of different crowdfunding designs on the success of crowdfunded public goods using a lab-in-the-field experiment. Our design treatments aim to increase the efficiency of crowdfunding campaigns by raising aggregate contributions and decreasing possible coordination problems that may occur when potential donors are faced with a multitude of projects seeking contributions. Amongst others, we explore the potential of seed money and the impact of the attraction effect. Using a four-day time window we implement our crowdfunding experiment using a web-based user interface with multiple threshold public goods, similar in style to conventional crowdfunding websites. We find that such alternative crowdfunding designs affect efficiency via improving coordination, and not so much via affecting total contributions. These results are confirmed in a follow-up framed field experiment with actual nature conservation projects.JEL Classification: C93, H41, L31, Q57

Donation-based crowdfunding with refund bonuses

“…The follow-up experimental studies of Bagnoli and McKee (1991) and Bagnoli et al (1992) demonstrate lower efficiency rates for multiple public good projects. Recently, Corazzini et al (2015) and Ansink et al (2017) have confirmed the same outcome of lower provision rates for multiple public goods.…”

Early refund bonuses increase successful crowdfunding

“…The data analysis accounts for the period number and treatment ordering to verify that the main conclusions are not sensitive to these small procedural variations. We did not include alternative projects with identical refund bonus conditions, or both with no refund bonus, because previous research (Corazzini et al, 2015(Corazzini et al, , 2020Ansink et al, 2017;Cason and Zubrickas, 2019) has already investigated coordination and contributions to multiple projects with similar or identical characteristics.…”

Delegation and coordination with multiple threshold public goods: experimental evidence

“…Several recent papers consider related extensions of this framework. Ansink et al (2017) considers the impact of seed money on contributions and extends the framework to allow for giving in continuous time. Cason and Zubrickas (2018) and Liu et al (2016) considers the impact of rebates when a public good fails to achieve its threshold on contributions in a multiple good setting.…”