How to perfectly discriminate in a crowd? A theoretical model of crowdfunding.

This paper proposes a theoretical framework to capture the underlying mechanisms of the innovative online crowdfunding. The goal of this work is to emphasize the advantages of crowdfunding platforms over traditional methods of sale, by describing the capabilities unique to such model and processes stemming from them. Namely, the producer’s chance for perfect discrimination is discussed, as well as the contributor’s role and his decision dilemma. Numerous extensions to the model provide additional insight into crowdfunding platforms.