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This paper analyzes the substantially growing markets for crowdfunding, in which retail investors lend to borrowers without financial intermediaries. Critics suggest these markets allow sophisticated investors to take advantage of unsophisticated investors. The growth and viability of these markets critically depends on the underlying incentives. We provide evidence of perverse incentives in crowdfunding that are not fully recognized by the market. In particular we look at group leader bids in the presence of origination fees and find that these bids are (wrongly) perceived as a signal of good loan quality, resulting in lower interest rates. Yet these loans actually have higher default rates. These adverse incentives are overcome only with sufficient skin in the game and when there are no origination fees. The results from the analysis in this paper provide more general implications for crowdfunding, its structure and regulation.

© 2016 INFORMS

The LeChatelier-Samuelson principle states that, as a reaction to a shock, an agent's short-run adjustment of an affected action is smaller than its long-run adjustment (when the agent can also adjust other related actions). We extend the principle to strategic environments where the long-run adjustment also accounts for other players adjusting their strategies. We show that the principle holds for supermodular games (strategic complements) satisfying monotone comparative statics and provide sufficient conditions for the principle to hold in games of strategic substitutes/heterogeneity. We discuss the principle's implications for cost pass-through of multiproduct firms.

In December 2016, the Digital Society Institute hosted a workshop on requirements to create a compatibility of data protection and IT security regulation. Contributions to the workshop were given by Marit Hansen (ULD Schleswig-Holstein), Tomasz Lawicki (TeleTrusT working group “State of the Art Technology”), Steve Ritter (BSI) and Johannes Schlattmann (LVM).

The issue contains German text and English translation in one file.

The two-part case study describes two attempts to empower the crews of two nuclear submarines of the US Navy. The case highlights the challenges as well as the weaknesses and strengths of the empowering process. While not against the operational principle of command and control on board a submarine, empowerment is in contrast to the traditional leadership doctrine of the US Navy which relies on the leader-follower principle. The case is based on the personal account of co-author L. David Marquet, Captain, US Navy (Ret.) and former commander of the USS Santa Fe. He authored the bestselling book Turn the Ship Around! that provides a more detailed account of the events described in the A and B cases.

The case may be used in the leadership courses in MBA and executive education programs. Apart from the main objective of highlighting the principle of empowerment, instructors may also explore how to motivate individuals and groups in critical settings. The instructor may ask executives to reflect on their own leadership experiences. On the whole, the case may be used to address the following subjects: (1) empowerment, (2) inquiry, (3) leadership styles, (4) motivation, (5) followership, (6) team management, and (7) situational leadership.

The two-part case study describes two attempts to empower the crews of two nuclear submarines of the US Navy. The case highlights the challenges as well as the weaknesses and strengths of the empowering process. While not against the operational principle of command and control on board a submarine, empowerment is in contrast to the traditional leadership doctrine of the US Navy which relies on the leader-follower principle. The case is based on the personal account of co-author L. David Marquet, Captain, US Navy (Ret.) and former commander of the USS Santa Fe. He authored the bestselling book Turn the Ship Around! that provides a more detailed account of the events described in the A and B cases.

The case may be used in the leadership courses in MBA and executive education programs. Apart from the main objective of highlighting the principle of empowerment, instructors may also explore how to motivate individuals and groups in critical settings. The instructor may ask executives to reflect on their own leadership experiences. On the whole, the case may be used to address the following subjects: (1) empowerment, (2) inquiry, (3) leadership styles, (4) motivation, (5) followership, (6) team management, and (7) situational leadership.

Organizations strive to tap into the potential of crowdsourcing by asking people around the world to come up with ideas. But what makes crowdsourcing work? We conducted a large-scale research project to understand why some organizations succeed to attract crowds and others fail.