Strategic Behavior in Crowdfunding: Insights from a Large-Scale Online Experiment

This study examines strategic behavior in crowdfunding using a large-scale online experiment. Building on the model of Arieli et. al 2023, we test predictions about risk aversion (i.e., opting out despite seeing a positive private signal) and mutual insurance (i.e., opting in despite seeing a negative private signal) in a static, single-shot crowdfunding game, focusing on informational incentives rather than dynamic effects. Our results validate key theoretical predictions: crowdfunding mechanisms induce distinct strategic behaviors compared to voting, where participants are more likely to follow private signals (odds ratio: 0.139, $p < 0.001$). Additionally, the study demonstrates that higher signal accuracy (85\% vs. 55\%) decreases risk aversion (odds ratio: 0.414, $p = 0.024$) but increases reliance on mutual insurance (odds ratio: 2.532, $p = 0.026$). However, contrary to theory, increasing the required participation threshold (50\% to 80\%) amplifies risk aversion (odds ratio: 3.251, $p = 0.005$), which, pending further investigation, may indicate cognitive constraints. Furthermore, we show that while mutual insurance supports participation, it may hinder information aggregation, particularly as signal accuracy increases. These findings advance crowdfunding theory by confirming the impact of informational incentives and identifying behavioral deviations that challenge standard models, offering insights for platform design and mechanism refinement.