I notice that I am confused why assurance contracts are not more widely used. Kickstarter is the go-to example for a successful implementation of ACs, but Kickstarter only targets a narrow slice of the things that could potentially be funded by ACs, and other platforms that could support other forms of ACs people often don’t feel comfortable using. The fact that Kickstarter has managed to produce a brand that is so conducive to ACs suggests that people recognize the usefulness of ACs, and are willing to partake in them, but there’s low-hanging fruit to extend ACs beyond just what Kickstarter considers ‘art’.
Just a guess: transaction costs caused by scams and failed projects?
Imagine that someone promises on Kickstarter to create a project, receives lots of money, and then delivers a thing which obviously is not the same thing or nowhere near the quality that was originally promised, but it still is something and the author insists that the result should count, and most backers—but not all of them—disagree. How are you going to resolve this mess? Someone is going to lose their money and be angry at you.
Maybe with non-art these problems are even worse than with art. Maybe with art, you can legally argue that art is subjective, you put a bet on the author, you got something, and if you are not satisfied that’s just your opinion, Kickstarter doesn’t care whether in your opinion the product is insufficiently artistic. But with non-art, the backers could argue that the product violates some objective criteria, and the Kickstarter would have to take sides and get involved in a possible lawsuit?
As an extreme example, imagine a Kickstarter-backed COVID vaccine, which according to one study is mildly helpful (like, reducing your chance of getting infected by 10%), according to another study is completely useless, and no one wants to spend their money on a third study. Is this a legitimate product, or should backers get their money back?
Yeah, I think scams and the possibility of sub-standard final product are both factors that make people hesitant to participate in non-Kickstarter ACs, and have also caused problems with Kickstarters in the past. I guess Kickstarter manages to set the bar high enough that people feel fairly willing to trust in a Kickstarter project, while people aren’t as willing to trust other websites since they perceive a higher risk of scams / substandard final product. My impression is that it’s not that hard to make a Kickstarter, but by, for example, requiring a video pitching the idea, that makes it less likely that people will submit low-effort projects.
I notice that I am confused why assurance contracts are not more widely used. Kickstarter is the go-to example for a successful implementation of ACs, but Kickstarter only targets a narrow slice of the things that could potentially be funded by ACs, and other platforms that could support other forms of ACs people often don’t feel comfortable using. The fact that Kickstarter has managed to produce a brand that is so conducive to ACs suggests that people recognize the usefulness of ACs, and are willing to partake in them, but there’s low-hanging fruit to extend ACs beyond just what Kickstarter considers ‘art’.
Just a guess: transaction costs caused by scams and failed projects?
Imagine that someone promises on Kickstarter to create a project, receives lots of money, and then delivers a thing which obviously is not the same thing or nowhere near the quality that was originally promised, but it still is something and the author insists that the result should count, and most backers—but not all of them—disagree. How are you going to resolve this mess? Someone is going to lose their money and be angry at you.
Maybe with non-art these problems are even worse than with art. Maybe with art, you can legally argue that art is subjective, you put a bet on the author, you got something, and if you are not satisfied that’s just your opinion, Kickstarter doesn’t care whether in your opinion the product is insufficiently artistic. But with non-art, the backers could argue that the product violates some objective criteria, and the Kickstarter would have to take sides and get involved in a possible lawsuit?
As an extreme example, imagine a Kickstarter-backed COVID vaccine, which according to one study is mildly helpful (like, reducing your chance of getting infected by 10%), according to another study is completely useless, and no one wants to spend their money on a third study. Is this a legitimate product, or should backers get their money back?
Yeah, I think scams and the possibility of sub-standard final product are both factors that make people hesitant to participate in non-Kickstarter ACs, and have also caused problems with Kickstarters in the past. I guess Kickstarter manages to set the bar high enough that people feel fairly willing to trust in a Kickstarter project, while people aren’t as willing to trust other websites since they perceive a higher risk of scams / substandard final product. My impression is that it’s not that hard to make a Kickstarter, but by, for example, requiring a video pitching the idea, that makes it less likely that people will submit low-effort projects.