Mind the Gap: Crowd-Funding and the Role of Seed Money

Joseph Deutsch, Gil Epstein and Alon Nir
Additional contact information
Alon Nir: Bar-Ilan University

No 8955, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We analyze voluntary private contributions to public goods and the role seed money plays in signaling the public good's quality to potential subsequent contributors. We present a theoretical model and analyze two sets of naturally occurring data from crowd-funding platforms. After developing the theoretical background we find statistically significant switch points which distinguish between seed contributions to subsequent contributions. A positive change in contribution behavior after the switch suggests an increase in the perceived value of the public good. We find that the signal comprises the number of contributors and the average contribution (as proportion of targeted goal).

Keywords: public goods; voluntary private provision; crowd-funding platform; seed money (search for similar items in EconPapers)
JEL-codes: D8 H4 H42 H8 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2015-03
New Economics Papers: this item is included in nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: Managerial and Decision Economics, 2017, 38 (1), 53 - 75

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Related works:
Journal Article: Mind the Gap: Crowdfunding and the Role of Seed Money (2017)
Working Paper: Mind the Gap: Crowd-funding and the Role of Seed Money (2015)
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