Publication Date: December 2018
Revision Date: January 2021
We study reward-based crowdfunding, a new class of dynamic contribution games where a private good is produced only if the funding goal is reached by a deadline. Buyers face a problem of coordination rather than free-riding. A long-lived donor may alleviate this coordination risk, signaling his wealth through dynamic contributions. We characterize platform-, donor-, and buyer-optimal equilibrium outcomes, attained by Markov equilibria with simple donation strategies. We test the model’s predictions using high-frequency data collected from the largest crowdfunding platform, Kickstarter. The model ﬁts the data well, especially for predictions concerning comparative statistics, donation dynamics, and properties of successful campaigns.
Keywords: Crowdfunding, Contribution Games, Dynamic Models, Kickstarter
JEL Classification Codes: C73, L26, M13CFDP 2149