Crowdfunding as a Pure Coordination Game: Revisiting Neoclassical and Transaction Cost Theory

Abstract

The increasing importance of crowdfunding in entrepreneurial finance has opened multiple theoretical debates on how this phenomenon should be conceptualized. While the neoclassical approach considers crowdfunding as a simple market transaction governed by price mechanisms, and the transaction cost theory emphasizes the role of organizational governance structures, both perspectives fail to capture the core dynamic at play in crowdfunding transactions. This paper proposes that crowdfunding is fundamentally a pure coordination game, where the coordination of expectations among backers and project initiators is central to success. Drawing upon the limits of neoclassical and transaction cost frameworks, this study introduces the framework of coordination games and conventions, rooted in game theory and social conventions, to explain how collective action emerges among independent agents. The analysis demonstrates that neither price mechanisms nor hierarchical governance determine funding outcomes, but rather mutual expectations and self-fulfilling prophecies do. This theoretical contribution offers new insights for platform design, public policy, and the understanding of decentralized collective action.