Decentralized Funding

Breaking Barriers to Giving:
Solution to the Free Rider Problem

What is Free-Rider Problem?

In many fundraising efforts, organizations struggle with a common challenge known as the free-rider problem.
This occurs when individuals choose not to contribute, assuming that others will carry the burden of giving, yet they still benefit from the positive outcomes.
Over time, this can significantly hinder the success of fundraising campaigns, as fewer people actively engage, and contributions fall short of their potential.

67%

is the likelihood of free-riding among those voluntarily able to donate blood.(1)

57%

of participants free ride in controlled donation experiments.(2)

Our Academic Evidence

Overview

Our study explores how Web3-based incentives can motivate more people to contribute to funding projects by using game theory—a well-established tool in economics. By applying fundamental principles of economic behavior and considering factors like risk preferences and altruistic motivations, we aim to demonstrate how these Web3 incentivisation schemes influence donation behavior.

Key questions to be answered:

  • Does Web3-enabled incentivisation mechanism help increase donation?
  • How should the incentives be paid?

 

Key Findings

1. More Donation
Web3-enabled X-to-earn incentivisation model helps the fundraising project to attract more potential donors.

2. Appropriate Means of Payment
By paying the incentive reward through legal tender, the fundraising project can attract risk-averse donors.

An Agent-Based Simulation Model Representation

Start Simulation Experiment

To further investigate the effect of incentivisation and various means of reward payment, we also built an agent-based model using Netlogo software, referencing related academic works. Unlike game theoretical models, it allows us to be free from assuming rationality by implementing reinforcement learning donors, and it also allows us to incorporate more factors: risk preference, price fluctuations, etc. 

Learn about ONGAESHI:
A Case Study for the Proposed Design
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Introduction Page

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Transparency is Another Key Issue for Fundraising Platforms. Click to Learn More

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  • (1) Abásolo I, Tsuchiya A. Blood donation as a public good: an empirical investigation of the free rider problem. Eur J Health Econ. 2014 Apr;15(3):313-21.
  • (2) Takeuchi, A., & Seki, E. (2023). Overcoming problems of coordination and freeriding in a game with multiple public goods: dynamic contribution with information provision. The Japanese Economic Review, 74(3), 379-411.

Fukuhara Masahiro Research Seminar 2024

For any inquiries, please E-mail fukuharazemi@gmail.com
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