A normal Kickstart is already impossible to price correctly − 99% either deliberately underprice to ensure “success” (the “preorders” model) or accidentally underpriced and cost the founders a ton of unpaid overtime (the gitp model) or they overpriced and don’t get funded.
Maybe “harder to price” isn’t what I should have said. Before you offer a dominant assurance contract, you need to have an accurate estimate of how much your project is worth to your potential funders. If your Kickstarter doesn’t get funded, you don’t lose (much) money, so you can just make the offer and see what happens. However, if you need $1000 to do a project but it turns out that people are collectively valuing it at only $500, then if you do offer to do the project using a dominant assurance contract, then either the project doesn’t get funded and you get screwed, or the project does get funded and (some of) the funders get screwed.
There are people willing to take financial risks for profits.
then if you do offer to do the project using a dominant assurance contract, then either the project doesn’t get funded and you get screwed, or the project does get funded and (some of) the funders get screwed.
The way I think of it is that there is a co-ordination problem. People want public goods, some people want to provide it, but they have difficulty coordinating. So either the project gets funded: yay people get the public good they wanted. Or it does not and people didn’t really want that public good anyway (and you pay the cost for poorly predicting peoples preferences and sucking up their attention). So to me it’s more of a win-win.
Why is it harder to price than a normal Kickstarter? Is it choosing the refund rate (e.g 10% or 20%) that you think is hard?
A normal Kickstart is already impossible to price correctly − 99% either deliberately underprice to ensure “success” (the “preorders” model) or accidentally underpriced and cost the founders a ton of unpaid overtime (the gitp model) or they overpriced and don’t get funded.
Maybe “harder to price” isn’t what I should have said. Before you offer a dominant assurance contract, you need to have an accurate estimate of how much your project is worth to your potential funders. If your Kickstarter doesn’t get funded, you don’t lose (much) money, so you can just make the offer and see what happens. However, if you need $1000 to do a project but it turns out that people are collectively valuing it at only $500, then if you do offer to do the project using a dominant assurance contract, then either the project doesn’t get funded and you get screwed, or the project does get funded and (some of) the funders get screwed.
So initially I wanted to price at $829 but https://manifold.markets/moyamo/how-much-money-will-my-metacrowdfun only gave me like 30% chance of succeeding. So I changed the price to $629 which gave me 45% chance of succeeding.
There are people willing to take financial risks for profits.
The way I think of it is that there is a co-ordination problem. People want public goods, some people want to provide it, but they have difficulty coordinating. So either the project gets funded: yay people get the public good they wanted. Or it does not and people didn’t really want that public good anyway (and you pay the cost for poorly predicting peoples preferences and sucking up their attention). So to me it’s more of a win-win.