Understanding delivery delays: The role of private delivery time information in reward-based crowdfunding

We analyze a crowdfunding market with backers, a platform, and a creator to identify potential causes of delivery delay issues and evaluate the effectiveness of solutions. There are two types of actual delivery times for the creator, and the delivery time of the high-type is stochastically faster than the delivery time of the low-type. We first analyze the promised delivery time decisions and the first-best expected profits of the two types of creators in the symmetric-information scenario. We then characterize an effective reimbursement rate, which is the minimal amount that a creator is required to pay for each delayed delivery, and find that this rate can fully prevent the delivery delay. In the asymmetric-information scenario, where the creator type is private information, we fully obtain the perfect Bayesian equilibrium by specifying the costly and costless separating equilibrium and the pooling equilibrium. Importantly, we demonstrate that the effective reimbursement rate mentioned earlier cannot prevent delays caused by a high-type creator’s distortion in determining the promised delivery time, highlighting the flaw of the reimbursement policy. Surprisingly, increasing a low-type’s delivery inefficiency degree always harms the low-type creator but does not necessarily benefit the high-type. Finally, we discuss how the platform could fix the reimbursement policy’s flaw and check the robustness of our findings by relaxing assumptions.