Entrepreneurs are turning to crowdfunding as a way to finance their creative ideas. Crowdfunding involves relatively small contributions of many consumer-investors over a fixed time limit (generally a few weeks). In online crowdfunding communities, potential donors can see the level of support from other project backers as well as its timing before making their own funding decisions, suggesting that social information (i.e., others’ funding decisions) will play an important role in the ultimate success of a project. Two years of publicly available panel data on successfully and unsuccessfully funded projects listed on Kickstarter is used to empirically study the role of social information in the dynamic behavior of project backers. Building off the well-established social psychology theory around diffusion of responsibility effects, we show that additional backer support is negatively related to its past backer support. Many potential backers do not contribute to a project that has already received a lot of support because they assume that others will provide the necessary funding. Consistent with the deadline effect widely observed in bargaining and online auctions, we also show that the diffusion of responsibility effects diminish as the project funding cycle approaches its closing date. Moreover, as the project deadline draws near we find that project updates tend to increase as the project creators make a final plea for help to reach their funding goal. Reduced diffusion of responsibility effects, together with the positive influence of project updates, lead to generally increasing project support in the final stages of funding. This is particularly the case for projects that successfully achieve their goals as they are more likely to have an update in the last weeks of funding and generate more excitement from recent backers than projects that fall short.

Crowdfunding creative ideas: the dynamics of project backers in kickstarter

Does my contribution to your crowdfunding project matter

Entrepreneurs are turning to crowdfunding as a way to finance their creative ideas. Crowdfunding involves relatively small contributions of many consumer-investors over a fixed time period (generally a few weeks). The purpose of this chapter is to add to our empirical understanding of backer dynamics over the project-funding cycle. Publicly available data of two years on projects listed on Kickstarter are used to establish that the typical pattern of project support is U-shaped—in general, backers are more likely to contribute to a project in the first and last weeks as compared to the middle period of the funding cycle. We further establish that this U-shaped pattern of support is pervasive across projects, including both successfully and unsuccessfully funded projects, those with large and small goals, and projects in different categories. We then empirically explore the dynamics associated with several factors, including collective attention effects from platform-sorting options, the role of family and friends in supporting projects, the effects of social influence, and the role of project updates over the project-funding cycle.

Crowdfunding Creative Ideas: The Dynamics of Project Backers

Crowdfunding has become important in recent years. However, there is no comprehensive overview of the economic literature on this topic. This paper provides an overview of crowdfunding literature, classified in terms of the main actors (capital seekers, capital providers, and intermediaries), and presents important research questions for future research.

Crowdfunding: A Literature Review and Research Directions

https://repository.tudelft.nl/islandora/object/uuid%3Acca31f0a-971c-43c4-9d6c-fcb921855312/datastream/OBJ/download

Nature-based solutions efficiency evaluation against natural hazards : Modelling methods, advantages and limitations

There is a widespread belief that peer effects are important in charitable giving but little evidence on how donors respond to their peers. Analysing a unique data set of donations to online fund-raising pages, we find positive and sizeable peer effects: a £10 increase in the mean of past donations increases giving by £2.50, on average. Donations respond to both very large and very small amounts and to changes in the mode. We find little evidence that donations signal charity quality – our preferred explanation is that donors use information on earlier donations to decide what is appropriate for them to give.

/pdf/peer-effects-in-charitable-giving-evidence-from-the-running-4o6ijti9l3.pdf

Peer effects in charitable giving: Evidence from the (running) field

Despite the recognition of the need for mitigation approaches to landslide risk in developing countries, the delivery of ‘on-the-ground’ measures is rarely undertaken. With respect to other ‘natural’ hazards it is widely reported that mitigation can pay. However, the lack of such an evidence-base in relation to landslides in developing countries hinders advocacy amongst decision makers for expenditure on ex-ante measures. This research addresses these limitations directly by developing and applying an integrated risk assessment and cost-benefit analysis of physical landslide mitigation measures implemented in an unplanned community in the Eastern Caribbean. In order to quantify the level of landslide risk reduction achieved, landslide hazard and vulnerability were modelled (before and after the intervention) and project costs, direct and indirect benefits were monetised. It is shown that the probability of landslide occurrence has been substantially reduced by implementing surface-water drainage measures, and that the benefits of the project outweigh the costs by a ratio of 2.7 to 1. This paper adds to the evidence base that ‘mitigation pays’ with respect to landslide risk in the most vulnerable communities – thus strengthening the argument for ex-ante measures. This integrated project evaluation methodology should be suitable for adoption as part of the community-based landslide mitigation project cycle, and it is hoped that this resource, and the results of this study, will stimulate further such programmes.

An integrated approach for evaluating the effectiveness of landslide risk reduction in unplanned communities in the Caribbean

There is a widespread belief that peer effects are important in charitable giving, but surprisingly little evidence on how donors respond to their peers. We analyse a unique dataset of donations to online fundraising pages to provide evidence on the direction and magnitude of peer effects – we find that a £10 increase in the mean of past donations increases giving by £3.50, on average. We also explore potential explanations for why peers matter. We find no evidence that donations provide a signal of charity quality, nor any role for fundraising targets. Our preferred explanation is that donors benchmark themselves against the distribution of donations from their peers.

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Peer effects in charitable giving: Evidence from the (running) field

An integrated approach for evaluating the effectiveness of landslide risk reduction in unplanned communities in the Caribbean

Peer effects in charitable giving: Evidence from the (running) field

An integrated approach for evaluating the effectiveness of landslide risk reduction in unplanned communities in the Caribbean