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.