Ignorance is bliss? Information and risk on crowdfunding platforms

Abstract

This research examines the determinants of project success on crowdfunding platforms within a competitive context. We focus on the specific horizontal attributes of the project–attributes that do not affect the project returns but over which investors may have heterogeneous preferences–and on the project returns’ risk level. We run a laboratory experiment with several set-ups, where multiple projects compete for funding simultaneously and where potential investors operate in a quasi-continuous time. We find the horizontal attributes’ information affects project selection, while the risk level of the project returns affects the amount of collected funding.