Abstract
Taking investor’s perception into account, the optimal decisions about the product quality and platform advertisement are investigated in a dynamic model in the context of crowdfunding. Researches in the literature, however, usually set investor’s perception as a fixed value and rarely consider the important phenomenon that the online information has some influences on investor’s perception. Considering the effects of information about product quality and platform advertisement on the investor’s perception, a dynamic decision model is proposed. Firstly, investment desire and reference price of the investor are introduced in two dynamic settings to describe investor’s perception. Then, the optimal decisions about the product quality and platform advertisement are formulated under two circumstances: the sponsor and the platform make decisions independently and they cooperate as a system. Finally, the influences of reference price and cost-sharing ratio on the optimal results are compared and the data simulation experiment verifies the necessity of the study. Some new insights can be drawn for the operations management of the firm in crowdfunding as follows: (i) it is more profitable for the firm to cooperate with the platform when investors pay more attention to their reference price; (ii) it is optimal for the firm to share a larger proportion of platform cost when the profit-sharing ratio is low.
Highlights
As an effective way of financing, crowdfunding has rapid development in the investment market
After accessing to the information, investors will form a certain valuation about the product quality and they will compare the price of the product with their reference price when they make purchase decisions
It is reasonable to suppose that the sponsor and the platform make decisions simultaneously since the demand changes over time, and the cost-sharing ratio φ is assumed as a fixed value when we calculate the values of decisions about the product quality and platform advertisement
Summary
As an effective way of financing, crowdfunding has rapid development in the investment market. The location and space of the project advertisement will cause some important influences on investor’s perception Platforms of crowdfunding such as Kickstarter.com decide the location and space of the project introductions in a whole webpage. (1)How do the online information of the product quality and platform advertisement affect investor’s investment decisions?. To solve the above questions, we propose and analyze a dynamic model in which the sponsor designs the product quality to cater investor’s preference, and the platform formulates the strategies about project advertisement to optimize their own profit based on the changeable investor’s perception.
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