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Internalizing the externalities of overfunding: an agent-based model approach for analyzing the market dynamics on crowdfunding platforms

  • Crowdfunding platforms offer project initiators the opportunity to acquire funds from the Internet crowd and, therefore, have become a valuable alternative to traditional sources of funding. However, some processes on crowdfunding platforms cause undesirable external effects that influence the funding success of projects. In this context, we focus on the phenomenon of project overfunding. Massively overfunded projects have been discussed to overshadow other crowdfunding projects which in turn receive less funding. We propose a funding redistribution mechanism to internalize these overfunding externalities and to improve overall funding results. To evaluate this concept, we develop and deploy an agent-based model (ABM). This ABM is based on a multi-attribute decision-making approach and is suitable to simulate the dynamic funding processes on a crowdfunding platform. Our evaluation provides evidence that possible modifications of the crowdfunding mechanisms bear the chance to optimize funding results and to alleviate existing flaws.

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Author:Jascha-Alexander KochORCiDGND, Jens LausenORCiDGND, Moritz Kohlhase
URN:urn:nbn:de:hebis:30:3-636874
DOI:https://doi.org/10.1007/s11573-021-01045-w
ISSN:1861-8928
Parent Title (English):Journal of business economics
Publisher:Springer
Place of publication:Berlin ; Heidelberg
Document Type:Article
Language:English
Date of Publication (online):2021/05/25
Date of first Publication:2021/05/25
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2022/12/27
Tag:Agent-based modeling; Crowdfunding; Internalization of externalities; Market engineering; Overfunding; Pigouvian tax
Volume:91
Issue:9
Page Number:44
First Page:1387
Last Page:1430
Note:
Open Access funding enabled and organized by Projekt DEAL.
Institutes:Wirtschaftswissenschaften
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
JEL-Classification:C Mathematical and Quantitative Methods / C6 Mathematical Methods and Programming / C63 Computational Techniques; Simulation Modeling (Updated!)
D Microeconomics / D6 Welfare Economics / D61 Allocative Efficiency; Cost–Benefit Analysis
D Microeconomics / D6 Welfare Economics / D62 Externalities
Sammlungen:Universitätspublikationen
Licence (German):License LogoCreative Commons - Namensnennung 4.0