Start Date

11-12-2016 12:00 AM

Description

Rewards are one of the key mechanisms in crowdfunding, but we know little about how they influence fundraising success. This research-in-progress takes a behavioral-science perspective on crowdfunding and explores how to design reward menus to increase the chances of reaching funding targets. We show that backers’ preferences can be influenced with the help of “decoys”—asymmetrically dominated rewards that draw backers’ attention to more profitable rewards. We conducted an online experiment with forty participants to pre-test the effect of decoy rewards on crowdfunding success for three scenarios. Across all scenarios, the decoys increased the donations by approximately 11 percent. Mixed-effects logistic regression analysis confirmed the significance of the decoy effect. We are currently developing a mock crowdfunding website that will provide a more realistic environment in which to test alternative decoy-placement strategies in other crowdfunding scenarios with more participants and more rewards.

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Dec 11th, 12:00 AM

The Decoy Effect in Reward-Based Crowdfunding: Preliminary Results from an Online Experiment

Rewards are one of the key mechanisms in crowdfunding, but we know little about how they influence fundraising success. This research-in-progress takes a behavioral-science perspective on crowdfunding and explores how to design reward menus to increase the chances of reaching funding targets. We show that backers’ preferences can be influenced with the help of “decoys”—asymmetrically dominated rewards that draw backers’ attention to more profitable rewards. We conducted an online experiment with forty participants to pre-test the effect of decoy rewards on crowdfunding success for three scenarios. Across all scenarios, the decoys increased the donations by approximately 11 percent. Mixed-effects logistic regression analysis confirmed the significance of the decoy effect. We are currently developing a mock crowdfunding website that will provide a more realistic environment in which to test alternative decoy-placement strategies in other crowdfunding scenarios with more participants and more rewards.