New NSF Grant to Study Crowdfunding
I’ve received a new grant from the US National Science Foundation to study crowdfunding.
A crowdfunding website allows users to post an idea for a project, such as an investigative news story they would like to write or a movie they would like to make. Each project has an amount of money that is needed and a deadline by which that money is needed. The public then is allowed to pledge money to a project in small amounts.
Most crowdfunding websites have a rule: if the deadline comes around and there is a sufficient amount of money pledged to do the project, then the pledges are given to the project originator. If not enough money has been pledged, then all pledges are returned to the originator. This is an example of a rule that makes it safe to contribute to projects before they’ve been started.
In this project, I am studying how to design such rules for crowdfunding websites. The fundamental challenge is that multiple contributions are needed to fund a project, but each individual contributor would prefer to wait for others to act first and prove the project worthwhile. This complementarity between contributions makes designing rules for matching difficult; indeed previous research has shown that it isn’t always possible to design a rule that results in a stable, satisfactory match in all cases.
Additionally, this project will be looking at ways to technologically recommend which projects a user might be interested in funding. This is difficult for exactly the same reason: users prefer to fund “popular” projects that others will also fund. A small contribution to an unpopular project is likely to be returned, but a small contribution to a popular project is likely to end up actually benefiting the project. The means that the recommender system has to take into account not only the user’s preferences, but also the likely behavior of others.
This project was funded by the US National Science Foundation through the ICES: Integrating Computer, Economic, and Social Sciences program for approximately $400,000 and will run through at least April 2014. I am the sole PI on the project.