Crowdfunding, cascades and informed investors

- I model investment choices among multiple projects on a crowdfunding platform.
- Under imperfect information about the quality of projects, cascades can form.
- Surprisingly, fewer informed investors can cause more good projects to be funded.
- Fewer good projects in the pool can also cause more good projects to be funded.

Do higher proportions of (a) informed investors and (b) high-quality projects increase the number of good projects that are ultimately financed via crowdfunding? A simple model and simulation reveal the answers to both questions to be: 'not necessarily'.