Crowdfunding with overenthusiastic investors : a global game model

Abstract : Crowdfunding platforms are providing funds to an increasing number of projects, among which many have a strong social/community impact. Under a all-or-nothing program, the success of the investment depends on the ability of a crowd of potential investors to put their funds into the project without an explicit coordination device. With heterogeneous information, such a problem can be analyzed as a typical global game. We assume that signals of at least some agents present a systematic positive bias, driven by positive emotions about projects with high social/community impact. The analysis reveals that if the number of such overenthusiastic persons is large enough, crowdfunding finance might support financially inefficient projects. We then analyze how a monopolistic platform optimally determines transaction fees and unveil the relationship between overenthusiasm and the profit of the platform.
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Submitted on : Tuesday, February 27, 2018 - 4:32:32 PM
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Damien Besancenot, Radu Vranceanu. Crowdfunding with overenthusiastic investors : a global game model. 2018. ⟨hal-01718793⟩

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