Publication:
Using reputation (fame) to reduce information asymmetry in Islamic risk-sharing crowdfunding models: a game theory approach
Abstract
Crowdfunding as a part of sharing economy is a fast developing method of projects finance mobilization. From Islamic finance point of view, it is important to address the Islamic crowdfunding system to improve the new Fintech trends in Islamic communities. Moreover, risk sharing is the essence of Islamic finance and equity crowdfunding potentially is a proper musharakah risk sharing scheme to be compliance with Shariah of Islam. However, the lack of trust and the problem of information asymmetry are the main challenges of any type of risk sharing deal as well as crowdfunding. The main problem that should be answered to implement a successful Islamic crowdfunding platform is information asymmetry. Reputation mechanism is one of the newest ways to solve asymmetric information in web based social networks. The primary objective of reputation mechanisms is to enable efficient transactions in communities where cooperation is compromised by post-contractual opportunism or information asymmetries. A reputational mechanism has been designed in this research specifically for crowdfunding system to eliminate moral hazard and reduce asymmetric information. The role of reputation is important as a mechanism for establishing trust to address the risk of fraud in online transactions. We defined the concept of “Fame”, in order to implement the reputation mechanism in our designed crowdfunding system. “Fame” refers to credibility of every individual who is a member of the crowdfunding system.
Keywords
Crowdfunding , Risk-sharing , Information asymmetry , Fame , Game theory approach
Citation
Torabi, O. (2017). Using reputation (fame) to reduce information asymmetry in Islamic risk-sharing crowdfunding models: a game theory approach (Doctoral dissertation). INCEIF, Kuala Lumpur. Retrieved from https://ikr.inceif.org/handle/INCEIF/2777
Publisher
INCEIF
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