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Two-Sided Platform Governance: Are Founders Manipulating the Crowd in Crowdfunding?

SSRN, ISSN: 1556-5068
2024
  • 0
    Citations
  • 339
    Usage
  • 0
    Captures
  • 0
    Mentions
  • 0
    Social Media
Metric Options:   Counts1 Year3 Year

Metrics Details

  • Usage
    339
    • Abstract Views
      281
    • Downloads
      58
  • Ratings
    • Download Rank
      740,385

Article Description

The crowd is usually wise but can be subject to manipulation by insiders. We use internal administrative records from a leading European crowdfunding platform to study platform governance on two-sided crowdfunding platforms. Founders and regular investors naturally have different incentives with their investments. Consistent with model predictions, founders appear to try to exploit regular investors' sensitivity to the public history of a campaign by making anonymous self-investments. This could distort regular investors' belief formation. Founders tend to avoid and regular investors typically do not find public self-investments credible. To make crowdfunding even more attractive for early-stage financing, platforms could consider increasing the transparency of large self-investments.

Bibliographic Details

Thomas B. Åstebro; José Penalva

Elsevier BV

Multidisciplinary; non-price strategies; platform governance; two-sided platforms; wisdom of the crowd; information manipulation

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