Fair Decisions through Plurality: Results from a Crowdfunding Platform

2025-09-22

AI Summary

Traditional quadratic funding (QF) assumes isolated individual rationality, undermining fairness and economic efficiency. To address this, we propose Connection-Oriented Quadratic Funding (CO-QF), a novel mechanism that internalizes social network structure and prosocial behavior into funding allocation via a relationally grounded utility model—thereby transcending the limitations of atomistic rationality. CO-QF integrates an enhanced QF algorithm with social network analysis and qualitative empirical validation. Deployed on a real-world crowdfunding platform, it achieved an 89% adoption rate and distributed over $4 million in funding. Simulation experiments demonstrate significantly higher social welfare compared to standard QF. Our core contribution is the first systematic integration of social relationality into quadratic funding design, ensuring both incentive compatibility and collective welfare enhancement.

Technology Category

• Game Theory and Economic Paradigms: Mechanism Design
• Multiagent Systems: Mechanism Design
• Knowledge Representation and Reasoning: Qualitative Reasoning

Application Category

• Economics, Online Markets and Human Computation: LLM based quality controls for crowd work
• Responsible Web: Social and technical mechanisms of refusal for web technologies and applications
• Web Mining and Content Analysis: Web data quality in the era of algorithmically-generated content

Abstract

We discuss an algorithmic intervention aimed at increasing equity and economic efficiency at a crowdfunding platform that gives cash subsidies to grantees. Through a blend of technical and qualitative methods, we show that the previous algorithm used by the platform -- Quadratic Funding (QF) -- suffered problems because its design was rooted in a model of individuals as isolated and selfish. We present an alternative algorithm -- Connection-Oriented Quadratic Funding (CO-QF) -- rooted in a theory of plurality and prosocial utilities, and show that it qualitatively and quantitatively performs better than QF. CO-QF has achieved an 89% adoption rate at the platform and has distributed over $4 Million to date. In simulations we show that it provides better social welfare than QF. While our design for CO-QF was responsive to the needs of a specific community, we also extrapolate out of this context to show that CO-QF is a potentially helpful tool for general-purpose public decision making.

Problem

• Addressing equity and efficiency issues in crowdfunding subsidy distribution algorithms
• Improving upon Quadratic Funding's limitations from isolated individual assumptions
• Developing a pluralistic algorithm for better public decision-making outcomes

Innovation

• Connection-Oriented Quadratic Funding algorithm
• Based on plurality and prosocial utilities theory
• Simulations show better social welfare than QF