Highly Successful Projects Inhibit Coordination on Crowdfunding Sites
by: Jacob Solomon, Wenjuan Ma, and Rick Wash
Donors on crowdfunding sites must coordinate their actions to identify and collectively fund projects prior to their deadline. Some projects receive vast support immediately upon launch. Other seemingly worthwhile projects have more modest success or no success at raising funds. We examine how the presence of high-performing “superstar” projects on a crowdfunding site affects donors’ ability to coordinate their actions and fund other less popular but still worthwhile projects on the site. In a lab experiment where users simulate the dynamics of a crowdfunding site, we found that superstar projects reduce the likelihood that other projects are funded by the crowd, even when the super project has no opportunity to steal away donations form other projects. We argue that this is due to superstar projects setting too high of a standard of what a “fundable” project looks like, leading donors to underestimate the amount of support within a crowd for less exceptional projects.
Jacob Solomon, Wenjuan Ma, and Rick Wash. “Highly Successful Projects Inhibit Coordination on Crowdfunding Sites” Proceedings of the ACM Conference on Human Factors in Computing (CHI). San Jose, CA. May 2016.