Search Frictions in Crowdfunding Markets
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Topic: |
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Date: |
03/03/2017 |
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Time: |
10:30-12:00am |
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Venue: |
Room 105, Daoyuan Building, CUHK (SZ) |
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Speaker: |
Menghan Xu Xiamen University |
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Detail/ Abstract: |
This paper studies, theoretically and empirically, how search frictions affect resource allocation in competitive crowdfunding market. By analyzing a dynamic fixed-sample search model a` la Burdett and Judd (1983) with many-to-one matching, I show that interest rate dispersion caused by search frictions facilitates investor coordination and hence improves matching efficiency relative to no-friction environment. I construct a dataset on a large panel of fundraisers’ behaviors and find evidence of persistent rate dispersion and funding mismatches. According to a non-parametric estimation, I find that with dispersed rates, the coordination effect can improve the aggregate funding probability by 28% compared with a random matching context. |
