Consumer protection on Kickstarter

This article investigates consumer protection on Kickstarter—a popular and sizeable, yet largely unregulated reward-based crowdfunding platform. Specifically, the article focuses on Kickstarter campaigns’ use of price advertising claims (PACs) and their failure to honor the promised discounts. Analyses show that between 2009 and 2016, more than 500,000 consumers who backed a wide variety of game or technology campaigns lost on average $45.72 because of broken PAC promises. Whereas 75% of PAC campaigns did not provide the promised discounts, in almost 50% of all cases backers who were promised a discount paid more, not less, than the retail price. In contrast, backers of campaigns that did not promise a discount received larger effective discounts. Analyzing an extensive data set comprising 34,745 Kickstarter campaigns, complete backing histories of more than 400,000 backers, and more than 4 million consumer comments, complaints, and reviews, we show that broken PAC promises pose a substantial problem to consumers, that the problem is persistent across more than 6 years, and that it has not been resolved through self-regulation by market participants thus far

Crowdfunding versus credit when banks are stressed

BANK INSTABILITY SEEMINGLY COULD PUSH BORROWERS TO USE CROWDFUNDING AS A SOURCE OF EXTERNAL FINANCE. WE CONSTRUCT A NOVEL, HAND-COLLECTED DATA SET OF VENTURES' USES OF EQUITY CROWDFUNDING IN GERMANY, THEIR RELATIONSHIPS WITH BANKS, AND VARIOUS VENTURE TRAITS SINCE 2011. BY OBSERVING VENTUREBANK RELATIONSHIPS, WE CAN IDENTIFY IF VENTURES CONNECTED TO SHOCKED BANKS ARE MORE LIKELY TO USE CROWDFUNDING IN AN ATTEMPT TO SUBSTITUTE FOR CONTRACTING BANK CREDIT SUPPLY. OUR RESULTS SHOW THAT CROWDFUNDING IS SIGNIFICANTLY MORE LIKELY FOR NEW VENTURES THAT INTERACT WITH STRESSED BANKS. INNOVATIVE FUNDING SOURCES ARE THUS PARTICULARLY RELEVANT IN TIMES OF STRESS AMONG CONVENTIONAL FINANCIERS. BUT CROWDFUNDED VENTURES ARE GENERALLY ALSO MORE OPAQUE AND RISKY THAN NEW VENTURES THAT DO NOT USE CROWDFUNDING

The fallacy problem of entrepreneurs

ENTREPRENEURS OFTEN OVERESTIMATE THE LIKELIHOOD OF SUCCESS WHEN PLANNING THEIR OWN ACTIVITIES, WHICH USUALLY RESULTS IN EXCESS MARKET ENTRY. SINCE ENTREPRENEURS CONSIDER THEIR PROJECT AS UNIQUE, THE FORECASTS OF THE FUTURE OUTCOME ARE OFTEN ANCHORED ON THE CASE AT HAND RATHER THAN ON PAST RESULTS OF COMPARABLE PROJECTS – A PHENOMENON KNOWN AS THE PLANNING FALLACY. WE INVESTIGATE WHETHER ENTREPRENEURS SUFFER FROM A PLANNING FALLACY BIAS WHEN PROVIDED WITH HISTORICAL OUTCOMES OF COMPARABLE PROJECTS AND ITS CONSEQUENCES

sj-docx-1-etp-10.1177_10422587241227051 – Supplemental material for Biased Calibration: Exacerbating Instead of Mitigating Entrepreneurial Overplacement with Reference Values

Supplemental material, sj-docx-1-etp-10.1177_10422587241227051 for Biased Calibration: Exacerbating Instead of Mitigating Entrepreneurial Overplacement with Reference Values by Daniel Blaseg and Armin Schwienbacher in Entrepreneurship Theory and Practice</p

Is laissez-faire regulation sufficient to protect consumers?

UNDER LAISSEZ-FAIRE REGULATION, REGULATORS CHOOSE NOT TO INTERFERE BECAUSE THEY SEEK TO STIMULATE INNOVATION AND PROTECT ENTERPRISES FROM THE COSTS IMPOSED BY REGULATORY COMPLIANCE. YET, EMPIRICAL EVIDENCE REGARDING THE ABILITY OF LAISSEZ-FAIRE REGULATION TO ENSURE CONSUMER PROTECTION IS LACKING. THIS ARTICLE TESTS EMPIRICALLY WHETHER THE CURRENT LAISSEZ-FAIRE REGULATION OF PRICE ADVERTISING CLAIMS ON THE MOST POPULAR REWARD-BASED CROWDFUNDING PLATFORM, KICKSTARTER, IS SUFFICIENT TO PROTECT CONSUMERS