Start Date

12-16-2013

Description

Crowdfunding platforms enable the financing of projects by soliciting small investments from a large base of potential backers over the internet. These platforms create a dynamic funding network. We use data collected from Kickstarter, the largest crowdfunding platform, to study some of these network dynamics. We focus on project owners who choose to operate on both sides of the market, backing the projects of others. We study the impact of such out-of-project actions on the successful financing of projects. We find that an owner’s backing-history has a significant effect on financing outcomes. We also show that owners who are backers form a sub-community which is active in backing projects, especially those initiated by its members. We find evidence for both direct and indirect reciprocity. Backing the projects of other is a rewarding strategy. Projects created by active backers have higher success rates, attract more backers and collect more funds.

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Dec 16th, 12:00 AM

Playing Both Sides of the Market: Success and Reciprocity on Crowdfunding Platforms

Crowdfunding platforms enable the financing of projects by soliciting small investments from a large base of potential backers over the internet. These platforms create a dynamic funding network. We use data collected from Kickstarter, the largest crowdfunding platform, to study some of these network dynamics. We focus on project owners who choose to operate on both sides of the market, backing the projects of others. We study the impact of such out-of-project actions on the successful financing of projects. We find that an owner’s backing-history has a significant effect on financing outcomes. We also show that owners who are backers form a sub-community which is active in backing projects, especially those initiated by its members. We find evidence for both direct and indirect reciprocity. Backing the projects of other is a rewarding strategy. Projects created by active backers have higher success rates, attract more backers and collect more funds.