2020 JAN 07 (NewsRx) -- By a News Reporter-Staff News Editor at NewsRx Science Daily -- Current study results on Science - Operations Science have been published. According to news reporting originating in Anhui, People’s Republic of China, by NewsRx journalists, research stated, “Even distribution is a normal profit allocation mechanism for investment-based crowdfunding projects on many platforms. In other words, the investors with the same pledging funds will be paid evenly when the investment ends.”
Financial supporters for this research include National Natural Science Foundation of China (NSFC), Fundamental Research Funds for the Central Universities.
The news reporters obtained a quote from the research from the University of Science and Technology of China, “The even allocation mechanism works well under the assumption that the investors arrive at the platform simultaneously. However, in practice, the investors are sequential, therefore, the stories are different when considering the dynamic entry times of the investors. In this paper, we study ways to design appropriate profit allocation mechanisms to enhance the success rate of an investment-based crowdfunding project. The basic model focuses on the two-investor case, where only two investors with dynamic entry times are considered. The profit allocation mechanism is shown to have great impacts on the pledging probabilities of investors, as well as the success rate of a project. After that, we shift our focus to the two-cohort case, where dynamic investors are assumed to arrive at the platform as two sequential cohorts. By taking the sizes of each cohort into consideration, we are able to analyze the success rate of a project under various practical situations. Finally, we implement some numerical experiments to generalize our studies to the situations where (i) there are more than two pledging periods for the investors, (ii) the herding effect of the investors is considered, and (iii) the valuations of the investors are assumed to be normally distributed.”
According to the news reporters, the research concluded: “Our main results still hold under these general situations.”
For more information on this research see: Profit Allocation In Investment-based Crowdfunding With Investors of Dynamic Entry Times. European Journal of Operational Research, 2020;280(1):323-337. European Journal of Operational Research can be contacted at: Elsevier, Radarweg 29, 1043 Nx Amsterdam, Netherlands. (Elsevier - www.elsevier.com; European Journal of Operational Research - http://www.journals.elsevier.com/european-journal-of-operational-research/)
Our news correspondents report that additional information may be obtained by contacting L.D. Liu, University of Science and Technology, School of Management, Int Inst Finance, Hefei 230026, Anhui, People’s Republic of China. Additional authors for this research include Y.S. Yang and G.B. Bi.
The direct object identifier (DOI) for that additional information is: https://doi.org/10.1016/j.ejor.2019.07.016. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.