Asymmetric Information on Kickstarter
Kickstarter, for those of us that do not know, is a crowd-funding website that relies on the donations of millions of users to fund a proposed project. It runs on the marketing idea of providing incentives for funding such projects in the form of perks that are offered to backers. In the article sourced below, we have the project Zano — a miniature autonomous drone. One of the perks is being able to own one of these devices after its completion.
In many cases, this Kickstarter campaign runs in parallel to the used car buyer and seller market with asymmetric information. The buyers are essentially the kickstarter backers and the seller is the group that proposed Zano. In this scenario each buyer has a set value they wish to donate, but do so at their own risks. The buyers do not know about the quality of the actual product and although they are sold by what the group promises, they will not necessarily get what they saw. The end product could be a bad drone or it could be a good drone. It is important to note that the kickstarter only gives away the drone as a perk if a buyer donates at the value of the seller’s price of a good drone. In the end only the seller will know the quality of the drone, but the buyers will believe the end result they receive will be good drones and so the campaign succeeds because there is a self-filling expectations equilibrium.
Source: http://www.bbc.com/news/technology-34069150