An assurance contract, also known as a provision point mechanism, or crowdaction,[1] is a game-theoretic mechanism and a financial technology that facilitates the voluntary creation of public goods and club goods in the face of collective action problems such as the free rider problem.
The treatment of excess contributions varies: they may be lost, rebated proportionally to the contributors, or used to provide more of the public good.
[2] From 2005 to 2015, a website called pledgebank.com provided a way to do assurance contracts online with strangers using phrases like, "I will do ['some action'] but only if ['some number'] other people will do the same.
Assurance contracts are popular with libertarians and anarcho-capitalists who see it as a voluntary alternative to taxation.
If the quorum is not formed, the signors do not pay their share and indeed actively profit from having participated since they keep the money the entrepreneur paid them.