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Early contributors, cooperation and fair rewards in crowdfunding

Author

Listed:
  • Sylvain Béal

    (CRESE EA3190, Univ. Bourgogne Franche-Comté, F-25000 Besançon, France)

  • Marc Deschamps

    (CRESE EA3190, Univ. Bourgogne Franche-Comté, F-25000 Besançon, France)

  • Catherine Refait-Alexandre

    (CRESE EA3190, Univ. Bourgogne Franche-Comté, F-25000 Besançon, France)

  • Guillaume Sekli

    (CRESE EA3190, Univ. Bourgogne Franche-Comté, F-25000 Besançon, France)

Abstract

We address the issue of rewarding fairly contributors participating in a funded crowdfunding project. We develop a theoretical non-strategic model of crowdfunding and introduce on a new reward rule, which specifies the individual rewards obtained by the contributors as a function of both their financial contributions and the timing of these contributions. Our model share some similarities with other models of ressource sharing in which the axiomatic method is frequently used. Taking this approach, we characterize this new reward rule by a pair of natural axioms, and it turns out that the resulting rewards coincide with the Shapley value of a suitable cooperative game built from the crowdfunding project. This allocation rule conveys what we call the signaling effect: if two contributors make the same financial contribution, then the earlier of the two obtains a greater reward. In specific but relevant cases, we provide extra properties of this reward rule.

Suggested Citation

  • Sylvain Béal & Marc Deschamps & Catherine Refait-Alexandre & Guillaume Sekli, 2022. "Early contributors, cooperation and fair rewards in crowdfunding," Working Papers 2022-07, CRESE.
    • Handle: RePEc:crb:wpaper:2022-07
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    References listed on IDEAS

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    More about this item

    Keywords

    Crowdfunding; signaling; early contributions; fairness; cooperative games; Shapley value; core;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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