Rebate rules in reward-based crowdfunding: Introducing the bid-cap rule

Fabian Gerstmeier, Yigit Oezcelik and Michel Tolksdorf

No 202304, Working Papers from University of Liverpool, Department of Economics

Abstract: We study the efficacy of rebates in reward-based crowdfunding, where a project is only realized when a funding goal is met, and only those who pledge at least a reservation price receive a reward. We propose and experimentally test two rebate rules against the all-or-nothing model. Firstly, we adapt the proportional rebate rule from threshold public good games to our rewardbased setting. Secondly, we develop the novel bid-cap rule. Here, pledges must only be paid up to a cap, which is determined ex-post such that the provision point is exactly met. Theoretically, the bid-cap rule induces weakly less variance in payments compared with the proportional rebate rule. In our experiment, both rebate rules induce higher pledges and increase the project realization rate in comparison to the all-or-nothing model. Further, we can confirm that the variance of payments is lower under the bid-cap rule compared with the proportional rebate rule

Keywords: Crowdfunding; laboratory experiment; provision point mechanism; rebates (search for similar items in EconPapers)
JEL-codes: C72 C92 H41 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2023-05
New Economics Papers: this item is included in nep-exp and nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations:

Forthcoming

Downloads: (external link)
https://www.liverpool.ac.uk/media/livacuk/schoolof ... s/ECON,WP,202304.pdf First version, 2023 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:liv:livedp:202304

Access Statistics for this paper

More papers in Working Papers from University of Liverpool, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Rachel Slater ().