A theory of Crowdfunding: A mechanism design approach with demand uncertainty and moral hazard

Arbeitspapier

Crowdfunding provides the innovation that, before the investment, entrepreneurs contract with consumers. Under demand uncertainty, this improves a screening for valuable projects. Entrepreneurial moral hazard threatens this benefit. Focusing on the trade-off between value screening and moral hazard, the paper characterizes optimal mechanisms. Current crowdfunding schemes reflect their salient features. Efficiency is sustainable only if returns exceed investment costs by a margin reflecting the degree of moral hazard. Constrained efficient mechanisms exhibit underinvestment. Crowdfunding blurs the distinction between finance and marketing, but complements rather than substitutes traditional entrepreneurial financing. As a screening tool for valuable projects, crowdfunding unambiguously promotes social welfare.

Objekt anzeigen

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: SFB/TR 15 Discussion Paper ; No. 527

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Contract Law ; Illegal Behavior and the Enforcement of Law ; Design of Experiments: Laboratory, Individual ; Altruism; Philanthropy; Intergenerational Transfers
• Thema: Crowdfunding ; finance ; marketing ; demand uncertainty ; moral hazard

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Strausz, Roland
• Ereignis: Veröffentlichung
• (wer): Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)
• (wo): München
• (wann): 2015

Weitere Informationen

• Handle: http://hdl.handle.net/10419/157304