As a growing enormously method of financing and selling new products, crowdfunding usually accompanies with the overstating product quality. We consider creators with low product quality in a crowdfunding market may use false advertising to overstate the value of their products and a policy maker can punish such false advertising. We propose a two-period crowdfunding model in which a creator may charge different prices over time to sequentially arriving buyers. Both advertising and prices decisions of creators are discussed in the paper, and we characterize an equilibrium where false advertising interact with crowdfunding pricing dynamics over time.
Zhang, Juan; Huang, Jian; and Zheng, Xiabing, "False advertising in a crowdfunding market" (2019). WHICEB 2019 Proceedings. 49.