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Comparing Crowdfunding Mechanisms: Introducing the Generalized Moulin-Shenker Mechanism

Andrej Woerner, Sander Onderstal and Arthur Schram

No 10081, CESifo Working Paper Series from CESifo

Abstract: For reward-based crowdfunding, we introduce the strategy-proof Generalized Moulin-Shenker mechanism (GMS) and compare its performance to the prevailing All-Or-Nothing mechanism (AON). Theoretically, GMS outperforms AON in equilibrium profit and funding success. We test these predictions experimentally, distinguishing between a sealed-bid and a dynamic version of GMS. We find that the dynamic GMS outperforms the sealed-bid GMS. It performs better than AON when the producer aims at maximizing funding success. For crowdfunding in practice, this implies that the current standard of financing projects could be improved upon by implementing a crowdfunding mechanism that is similar to the dynamic GMS.

Keywords: crowdfunding; market design; strategy-proofness; laboratory experiment (search for similar items in EconPapers)
JEL-codes: C92 D82 G29 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-des, nep-exp, nep-gth and nep-ppm
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