I went to Kickstarter and looked at upcoming campaigns (campaigns that are already planned but haven’t started gathering funds yet) to look for projects that seem especially fitting to use this model. Here’s four:
The Dark Quarter: “A cooperative narrative game exploring The Dark Quarter of 1980s New Orleans”. It’s by a company that has already run 10 Kickstarters. By using this model they can have more fundraisers succeed at the cost of paying refund bonuses on the few that fail. It definitely seems that they would have the money to invest in that if they wanted to.
CheerTok: All-in-one Pocket Touchpad for Any Smart Devices: A product that seems to have already had some success (it says “reddot winner 2022”, and I’m guessing it’s some product competition), investing in a successful kickstarter seems definitely worth it.
Mictlan: The Video Game: This is by a studio that hasn’t yet run any kickstarters, but it seems that the product already had a lot invested in it, making another small investment to make the kickstarter more likely to succeed seem worth it.
HOLO12 - The New Awesome Education Platform: “the new standard in Digital Learning. Featuring Augmented Reality and Next-Generation Science and Math Courses.”. The creator is “passionate about digital technologies, that create positive user experiences through good design and the smart implementation of practical technologies.” and has “Extensive international experience having worked in Silicon Valley, London and Dublin with brands like Rolex, Boeing, GE and the ESA.”. This seems like a project that’s very important to its creator, where the creator likely has the extra money and would be happy to invest it if it meant a higher chance the project would succeed.
There were others, of course. I picked a few that both seemed very fitting and showed a range of situations and reasons. Most projects there seemed to me like they would work for this new system. Though for the sake of completeness I did also look for projects that seemed unfit to me, and found thesetwo, which seem more on the personal side, where the creator might not be interested/capable of taking risk for them.
Neat—do you know if any of them are actually considering this mechanism? I’d be curious to know whether their reasons align with mine, or if it’s “we’d love this, but the additional friction of tracking it ourselves rather than platform support makes it just a bit too difficult”.
It also has me thinking—there’s no reason it couldn’t be funded by supporters rather than the seeker of funding. Same benefits (more likely to go), same costs (loss rather than neutral if unfunded). Early supporters could specify “want the bonus if unfunded”, “just want refund if unfunded”, or “encourage funding by making my pledge non-refundable”.
Which is another step along the way to just having a general prediction market on whether it’ll be funded. Allow hedging and side-betting by anyone. This STILL encourages full funding, as the best way to manipulate the market is in the positive direction: pledge.
I’d be surprised if they’ve even heard about it, so I don’t think so, but I don’t actually know (I don’t know anything about the projects or the creators except the little they wrote there).
Yep, letting backers fund the refund bonuses would also be great. I’d love to see an experiment (either in a lab or in a real crowdfunding platform) try that.
What are the barriers to platforms offering the option? I suspect there’s limited value in artificial experiments—the interaction of different motivations and estimates of success for real projects and real funders is likely to be too varied to control for.
Naively, it would seem cheap for a platform to offer it to fund-seekers, and running code trumps all of our theoretical arguments.
I honestly don’t see any barriers. Either they simply don’t know about it, or maybe they think that feature is too complex or somehow not worth it, or they have reasons I haven’t thought of. If anyone knows I expect it would be Alex Tabarrok, cause any company interested in that would have likely contacted him. Otherwise, it might be a good idea to contact crowdfunding platforms and ask them about it.
[Edit 30/aug/2023]: The barrier is probably legal. Offering a refund bonus is like offering a security, so it would be subject to equity crowdfunding regulations (probably, I’m not a lawyer).
I went to Kickstarter and looked at upcoming campaigns (campaigns that are already planned but haven’t started gathering funds yet) to look for projects that seem especially fitting to use this model. Here’s four:
The Dark Quarter: “A cooperative narrative game exploring The Dark Quarter of 1980s New Orleans”. It’s by a company that has already run 10 Kickstarters. By using this model they can have more fundraisers succeed at the cost of paying refund bonuses on the few that fail. It definitely seems that they would have the money to invest in that if they wanted to.
CheerTok: All-in-one Pocket Touchpad for Any Smart Devices: A product that seems to have already had some success (it says “reddot winner 2022”, and I’m guessing it’s some product competition), investing in a successful kickstarter seems definitely worth it.
Mictlan: The Video Game: This is by a studio that hasn’t yet run any kickstarters, but it seems that the product already had a lot invested in it, making another small investment to make the kickstarter more likely to succeed seem worth it.
HOLO12 - The New Awesome Education Platform: “the new standard in Digital Learning. Featuring Augmented Reality and Next-Generation Science and Math Courses.”. The creator is “passionate about digital technologies, that create positive user experiences through good design and the smart implementation of practical technologies.” and has “Extensive international experience having worked in Silicon Valley, London and Dublin with brands like Rolex, Boeing, GE and the ESA.”. This seems like a project that’s very important to its creator, where the creator likely has the extra money and would be happy to invest it if it meant a higher chance the project would succeed.
There were others, of course. I picked a few that both seemed very fitting and showed a range of situations and reasons. Most projects there seemed to me like they would work for this new system. Though for the sake of completeness I did also look for projects that seemed unfit to me, and found these two, which seem more on the personal side, where the creator might not be interested/capable of taking risk for them.
Neat—do you know if any of them are actually considering this mechanism? I’d be curious to know whether their reasons align with mine, or if it’s “we’d love this, but the additional friction of tracking it ourselves rather than platform support makes it just a bit too difficult”.
It also has me thinking—there’s no reason it couldn’t be funded by supporters rather than the seeker of funding. Same benefits (more likely to go), same costs (loss rather than neutral if unfunded). Early supporters could specify “want the bonus if unfunded”, “just want refund if unfunded”, or “encourage funding by making my pledge non-refundable”.
Which is another step along the way to just having a general prediction market on whether it’ll be funded. Allow hedging and side-betting by anyone. This STILL encourages full funding, as the best way to manipulate the market is in the positive direction: pledge.
I’d be surprised if they’ve even heard about it, so I don’t think so, but I don’t actually know (I don’t know anything about the projects or the creators except the little they wrote there).
Yep, letting backers fund the refund bonuses would also be great. I’d love to see an experiment (either in a lab or in a real crowdfunding platform) try that.
What are the barriers to platforms offering the option? I suspect there’s limited value in artificial experiments—the interaction of different motivations and estimates of success for real projects and real funders is likely to be too varied to control for.
Naively, it would seem cheap for a platform to offer it to fund-seekers, and running code trumps all of our theoretical arguments.
I honestly don’t see any barriers. Either they simply don’t know about it, or maybe they think that feature is too complex or somehow not worth it, or they have reasons I haven’t thought of. If anyone knows I expect it would be Alex Tabarrok, cause any company interested in that would have likely contacted him. Otherwise, it might be a good idea to contact crowdfunding platforms and ask them about it.
[Edit 30/aug/2023]: The barrier is probably legal. Offering a refund bonus is like offering a security, so it would be subject to equity crowdfunding regulations (probably, I’m not a lawyer).