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Crowdfunding with Strategic Pricing and Information Disclosure

Published: 26 July 2021 Publication History

Abstract

The crowdfunding industry is expected to reach a volume of $90 billion per year. In crowdfunding, a creator needs to decide not only the pricing but also when and how frequent to disclose the campaign progress to the contributors, in order to maximize the project revenue. In this paper, we present a first analytical study on how the creator's pricing and information disclosure strategies affect the potential contributors' belief update process, hence the project success and creator's expected revenue. Specifically, we consider a multi-stage crowdfunding model, where a stage corresponds to the period between the creator's two information disclosures. At the beginning of the campaign, a creator announces her pricing decision and information disclosure strategy for revenue maximization. Then contributors coming in each following stage will choose whether to contribute, based on not only the disclosed pledging status so far but also the estimation of the impact of their decisions on later contributors. Such a model is challenging to optimize because of the coupling across multiple stages, especially with contributors' anticipations of future stages. Nevertheless, we are able to characterize the contributors' threshold-based equilibrium pledging decisions, and we incorporate such a structural result into the creator's mixed-integer revenue maximization problem. Through both analytical and numerical studies, we show that the contributors' prior belief of high-valuation contributor percentage plays a critical role in the creator's optimal strategic information disclosure decisions. When the contributors have a high prior belief, a creator should not announce the pledging history until all the contributors have made their pledging decisions. When the prior belief is low, the creator should disclose more often.

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Cited By

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  • (2024)Strategic Pricing and Information Disclosure in CrowdfundingIEEE/ACM Transactions on Networking10.1109/TNET.2024.337474832:4(2988-3001)Online publication date: Aug-2024
  • (2023)Crowdfunding With Cognitive LimitationsIEEE/ACM Transactions on Networking10.1109/TNET.2023.327411431:6(2714-2729)Online publication date: 23-May-2023

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cover image ACM Conferences
MobiHoc '21: Proceedings of the Twenty-second International Symposium on Theory, Algorithmic Foundations, and Protocol Design for Mobile Networks and Mobile Computing
July 2021
286 pages
ISBN:9781450385589
DOI:10.1145/3466772
Permission to make digital or hard copies of all or part of this work for personal or classroom use is granted without fee provided that copies are not made or distributed for profit or commercial advantage and that copies bear this notice and the full citation on the first page. Copyrights for components of this work owned by others than ACM must be honored. Abstracting with credit is permitted. To copy otherwise, or republish, to post on servers or to redistribute to lists, requires prior specific permission and/or a fee. Request permissions from [email protected]

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Publication History

Published: 26 July 2021

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Author Tags

  1. Crowdfunding
  2. game theory
  3. information disclosure
  4. pricing

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  • Research-article
  • Research
  • Refereed limited

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  • the Shenzhen Institute of Artificial Intelligence and Robotics for Society
  • the Presidential Fund from the Chinese University of Hong Kong, Shenzhen

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MobiHoc '21
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MobiHoc '21 Paper Acceptance Rate 28 of 139 submissions, 20%;
Overall Acceptance Rate 296 of 1,843 submissions, 16%

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Cited By

View all
  • (2024)Strategic Pricing and Information Disclosure in CrowdfundingIEEE/ACM Transactions on Networking10.1109/TNET.2024.337474832:4(2988-3001)Online publication date: Aug-2024
  • (2023)Crowdfunding With Cognitive LimitationsIEEE/ACM Transactions on Networking10.1109/TNET.2023.327411431:6(2714-2729)Online publication date: 23-May-2023

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