For love or money? The effect of deadline proximity on completion contributions in online crowdfunding

Purpose: The authors investigate whether the individual “completion contributions” that enable online crowdfunding campaigns to meet or exceed their targets tend to be larger in relative terms when made nearer to the funding deadline. As these contributions are likely to have a disproportionate impact upon campaign outcomes, the authors assess whether the investment patterns they observe are consistent with the theory of impact philanthropy. Design/methodology/approach: The authors use campaign-level data incorporating observations on campaigns from reward (both all-or-nothing, AoN and keep-it-all, KiA), donation and equity-based platforms. To the knowledge of the authors, the coverage of the data is unparalleled elsewhere in the crowdfunding literature. Using these data, the authors analyze whether completion contributions tend to vary contingent upon both the proximity of the deadline and form of crowdfunding. Findings: The authors find that completion contributions tend to vary significantly and positively with proximity to funding deadlines. The authors also find that this relationship tends to be more pronounced among AoN than for KiA campaigns, as well as for donation-based platforms compared with equity-based platforms. Altogether, the patterns of behavior observed are consistent with the theory of impact philanthropy. Originality/value: The authors help develop a better understanding of the behaviors of contributors to online crowdfunding campaigns and whether those behaviors are consistent with altruistic motivations. The findings also have considerable value in understanding the non-financial factors associated with the informal financing of business startups

Crowdfunding vs. Taxes: Does the payment vehicle influence WTP for Ecosystem Services protection?

The effect of the payment vehicle (PV) on economic valuation estimates has been addressed since the early literature on stated preferences studies. Particularly, some studies have focused on willingness to pay (WTP) sensitivity to mandatory/collective vs. voluntary/individual PVs, by comparing tax increases or redistribution based on specific taxes with donation-like contributions. These two payment schemes may induce different types of strategic behavior and eventually free riding by the economic agents involved. We conducted a choice experiment through a face-to-face survey held in 2020 for a representative sample of the Portuguese population. We investigate the national population’s WTP to invest in oil spills’ prevention along the coastline of mainland Portugal to ensure the provision of four marine and coastal ecosystem services (MCES): (1) biodiversity conservation, (2) beach use, (3) coastal protection and (4) surf. We used a split-sample design to test for differences between the two PVs considered, a mandatory income tax and a voluntary contribution collected through a crowdfunding campaign. We estimate a mixed logit model (MXL) in WTP-space. Furthermore, we control for several sociodemographic characteristics to capture the influence of respondents’ heterogeneity on the elicited WTP, and to check the robustness of our results. We find that mean WTP estimates are positive and significant for all ES except for surf. Biodiversity conservation has the highest WTP estimate. The results obtained suggest that the lack of trust in institutions, fairness concerns and disbelief in policy consequentiality seem to be intrinsic to the Portuguese population, influencing WTP regardless of the PV. However, when comparing an extra income tax with a crowdfunding campaign, respondents have a lower preference for the status quo in this latter case. Therefore, our results highlight the importance of better understanding the role that the payment vehicle may play in funding ecosystem services’ conservation. This is important since how populations respond to incentives for sustainability purposes is crucial to ensure that the targets are met in a more efficient (or cost-effective) and equitable way.info:eu-repo/semantics/submittedVersio

Voluntary 'donations' versus reward-oriented 'contributions': Two experiments on framing in funding mechanisms

In an artefactual field experiment, we implemented a crowdfunding campaign for an institute's summer party and compared donation and contribution framings. We found that the use of the word 'donation' generated higher revenue than the use of 'contribution'. While the individuals receiving the donation framing gave substantially larger amounts, those receiving the contribution framing responded more strongly to reward thresholds and suggestions. An additional survey experiment on MTurk indicated that the term 'donation' triggers more positive emotional responses and that emotions are highly correlated with giving. It appears that making a donation is perceived as a more voluntary act and is thus more successful at generating warm glow than making a contribution. We surmise that this extends to other funding mechanisms

Risk-reducing options in crowdinvesting: An experimental study

Financial constraints are a striking difficulty of entrepreneurial ventures in the early stages of their development. Recently, emerging crowdinvesting platforms try to fill this finance gap by involving an anonymous crowd into the funding process. Due to high information asymmetries, platform providers and start-ups alike try their best to reduce the risk for investors. We therefore examine existing and thinkable mechanisms of option-based risk reduction in crowdinvesting. We use a 2x3x3 mixed subject design to manipulate the availability and characteristics of risk-reducing options and the project attractiveness. With 210 participants, we are able to show that the introduction of different risk-reducing options in crowdinvesting solely favors high quality projects and increases capital concentration in a market that was originally built to make start-up funding available to a broader range of capital seekers. We also suggest reasonable prices for options and prove them to be accurate relatively to each other. Further implications for theory and practice are discussed