Innovation needs everyone.

ResearchBehavioural foundations

Whether people take part is not decided by money alone. It is decided by knowledge, trust, habit and by how the decision is put to them.

01Why households are absent

It is not a lack of money that holds households back. What is missing is knowledge, access and an occasion to begin at all.

Those who take part in capital markets differ less in income than in knowledge: financial literacy is closely linked to stock market participation, even once other characteristics are accounted for.4 In Germany there are further explanations that do not lie in wealth but in habit, information costs and the sense that securities are meant for other people.9

Every station between first interest and actual investment costs attention, time and self-confidence. Where one of these stations is too demanding, participation ends, regardless of whether someone wanted to invest. That is precisely why the design of the procedure is not decoration but the real lever.

Where participation endsFive stations between interest and investment, schematic
Stations between interest and investment A band runs from left to right through five stations: attention, understanding, trust, decision, processing. At every station an arrow branches off downwards and the band narrows. The branches are labelled: never heard of it, too complicated, no trust, postponed, abandoned. On the right a narrow remainder is left: actual participation. Schematic illustration without measured values.
02Trust

Nobody can fully assess an early-stage venture. Trust is the mechanism that allows a decision nonetheless.

Trust reduces complexity: it allows people to act although far from everything can be known.2 Empirically this is no side issue. People with less trust in others and in institutions take part in capital markets less often and invest smaller amounts, irrespective of wealth.3

For an early-stage venture the gap between the knowledge required and the knowledge available is particularly wide: there is no track record, no price, no benchmark. That gap cannot be closed with more text. It can only be bridged by making the procedure itself traceable: standardised profiles, an expert review without any financial interest of its own, and a named supervisory authority.

The test for CIVINCO is therefore not whether people know enough, but whether they can trust the procedure within which they decide.1

The knowledge gapWhat an assessment requires, what a person can manage
Knowledge gap and procedure Three rows, all starting at the same point. At the top, in grey, seven fields for the knowledge that assessing a venture yourself would require: technology, market, team, competition, law, valuation, time. Below, in black, only two fields for what a person realistically brings: an understanding of the product and an impression of the team. A vertical line marks that limit. The remaining gap is filled by the third, blue row: standardised profile, admission by the EAC, documented steps, supervision.
03Social norms

What many people do becomes the benchmark. That helps participation and can damage it at the same time.

Feedback about the behaviour of others measurably changes one’s own behaviour. But it works in both directions: those below the average move towards it, those above it fall back. Only a sign of approval prevents that rebound.7 In large field experiments such feedback reduces consumption reliably, but by a modest magnitude.8

For CIVINCO this implies a precise distinction. It may be visible that people take part, because that is what creates the ordinariness on which participation rests. Amounts, rankings and comparisons between individuals must not be visible, because that is what creates competition over stakes. The difference between a norm and a game lies exactly here.1

How a norm emergesWhat is visible is that people take part, not how much they put in
Spread of participation in three stages Three equally large dot fields side by side. From left to right more and more dots are filled in blue: first a few, then about a quarter, then about half. The dots only show that people take part, not with what amounts. Schematic illustration.

The distinction is written into the model: your own position is visible, other people’s amounts are not. See No game mechanics.

04From intention to action

Between agreement and action lies friction. Reducing it is permitted; taking the decision away is not.

The effect of defaults is well documented in retirement saving: once participation becomes the default setting, it rises sharply, and many people subsequently stay with the preset values.5 A milder variant is documented as well: where employees are required to make an active decision, without any direction being suggested, participation rises markedly compared with a pure opt-in procedure.6

For a risk investment the first variant is ruled out. A participation people would have to opt out of would be neither defensible in supervisory terms nor compatible with the voluntariness that CIVINCO makes a condition. What remains is the second: a standardised path, a low hurdle, a conscious decision.

In practice: one uniform process for all ventures, comprehensible profiles, small amounts, clear deadlines, and at the end a confirmation a person has to give actively. Whatever makes the decision easier belongs here. Whatever replaces it does not.

05From finding to rule

Every finding has its counterpart in the procedure. Otherwise it would merely be a citation.

From finding to ruleWhat the research suggests and where it appears in the model
FindingDesign ruleIn the model
Knowledge is unequally distributed and costly to acquireStandardised, reviewed profiles instead of your own researchEAC, section 06
Trust substitutes for missing knowledgePublicly accountable procedure, documented stepsArchitecture, section 02
Small steps lower the hurdleMicro-investments with fixed capsThree pillars, section 05
Social comparison can backfireParticipation is visible, the amount is notNo game mechanics, section 10
Defaults would not be permissible hereActive choice: low hurdle, conscious decisionParticipation, section 09
The crowd prefers the familiarIntermediation and curation according to published rulesThe condition, section 11

The findings come mostly from adjacent fields: stock market participation, retirement saving, energy consumption. For participation in early-stage innovation finance the direct evidence is missing. That is precisely why a pilot with evaluation is part of the proposal and not an appendix. See Evaluation and implementation.

06Sources

Sources for this page.

  1. Steiner, T. M. (2026): Collective Risk-Sharing in Innovation Finance: An Institutional Model of Citizen Investorship. SSRN working paper. doi.org
  2. Luhmann, N. (1968): Vertrauen. Ein Mechanismus der Reduktion sozialer Komplexität. Stuttgart: Enke.
  3. Guiso, L., Sapienza, P. & Zingales, L. (2008): Trusting the Stock Market. The Journal of Finance, 63(6), 2557–2600.
  4. van Rooij, M., Lusardi, A. & Alessie, R. (2011): Financial Literacy and Stock Market Participation. Journal of Financial Economics, 101(2), 449–472.
  5. Madrian, B. C. & Shea, D. F. (2001): The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior. The Quarterly Journal of Economics, 116(4), 1149–1187.
  6. Carroll, G. D., Choi, J. J., Laibson, D., Madrian, B. C. & Metrick, A. (2009): Optimal Defaults and Active Decisions. The Quarterly Journal of Economics, 124(4), 1639–1674.
  7. Schultz, P. W., Nolan, J. M., Cialdini, R. B., Goldstein, N. J. & Griskevicius, V. (2007): The Constructive, Destructive, and Reconstructive Power of Social Norms. Psychological Science, 18(5), 429–434.
  8. Allcott, H. (2011): Social Norms and Energy Conservation. Journal of Public Economics, 95(9–10), 1082–1095.
  9. Ebert, S., Grote, M. & Laudenbach, C. (2019): Zum Rätsel der Aktienmarktteilnahme in Deutschland. Frankfurt School of Finance & Management and Goethe University Frankfurt, commissioned by Deutsche Börse AG. uni-heidelberg.de