The Cosmonaut: An Economic Experiment

So the guys who made the glif with much success, are now introducing another product on kickstarter.

The Cosmonaut. Its a wide-grip capacitive stylus for tablets.

The interesting thing is their pricing model. They are selling 3,000 of them, and they need to raise $50,000 to make that possible. But they are allowing the users to pay what they want for it, as long as they raise the $50,000 by the end of the month long, it’ll go through. If everyone pays $1, then the whole thing wouldn’t be funded ($3,000 < $50,000).

On average people should give 50,000 / 3000 = $16.6666666… dollars and it would just barely be funded. As of this morning:

Currently the average price is: $4,392/303 = $14.50. So people have to start increasing what they offer otherwise the final amount won’t be enough.

Interesting economic twist on the Radiohead model.

Sidenote, as a irrational person, I offered $16.67. A rational human would pay $1 and screw over everyone else. Oh well, lets see how rational people will be.

Update: At 4:46pm on 3/28/11, $20,895 raised and 1,325, so $15.77 each. price is rising.

Update 2: 3/30/11 This is from an email from the guys who put up the auction:
“This has ended up being a fascinating case study in game theory. We are looking forward to analyzing the backer breakdown and seeing how the pledge amounts were distributed. As of this writing, the pledge average came to $14.85, just shy of the $16.67 we needed to reach the goal.

So, we have decided to add two more tiers, which are both unlimited. One for $25, which will get you a Cosmonaut, and another for $50, which will get you 2. You are of course more than welcome to switch to either of those tiers if you so choose, but there is no need to. All current backers will be getting Cosmonauts. The advantage you all gained by being one of the first backers is you could set your own price, and will still be able to do so up until the campaign ends.”

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