Comparing Crowdfunding Mechanisms: Introducing the Generalized Moulin-Shenker Mechanism

Andrej Woerner, Sander Onderstal and Arthur Schram
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Andrej Woerner: LMU Munich

No 464, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

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 suggests that the current standard of financing projects may be improved upon by implementing a crowdfunding mechanism that is similar to the dynamic GMS.

Date: 2023-11-24
New Economics Papers: this item is included in nep-gth and nep-ppm
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Working Paper: Comparing Crowdfunding Mechanisms: Introducing the Generalized Moulin-Shenker Mechanism (2022)
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