BITlab: Behavior Information Technology

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Communication Arts & Sciences
Michigan State University
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Don’t Wait! How Timing Affects Coordination of Crowdfunding Donations

by: Jacob Solomon, Wenjuan Ma, and Rick Wash

Abstract

Crowdfunding sites often impose deadlines for projects to receive their requested funds. This deadline structure creates a difficult decision for potential donors. Donors can donate early to a project to help it reach its goal and to signal to other donors that the project is worthwhile. But donors may also want to wait for a similar signal from others.

We conduct an experimental simulation of a crowdfunding website to explore how potential donors to projects make this decision. We find evidence for both strategies in our experiment; some donate early while others wait till the last second. However, we also find that making an early donation is usually a better strategy for donors because the amount of donations made early in a project’s campaign is often the only difference between that project being funded or not. This finding suggests that crowdfunding sites need to develop designs, policies and incentives that encourage people to make immediate donations so that the site can most efficiently fund projects.

Reference

Jacob Solomon, Wenjuan Ma, and Rick Wash. “Don’t Wait! How Timing Affects Coordination of Crowdfunding DonationsComputer Supported Cooperative Work (CSCW). Vancouver, BC. March 2015.

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