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Article

Rational Herding in Reward-Based Crowdfunding: An MTurk Experiment

1
Department of Corporate Finance and ERI-CES, University of Valencia, Avenida de los Naranjos, s/n, 46022 Valencia, Spain
2
Department of Economic Analysis and ERI-CES, University of Valencia, Avenida de los Naranjos, s/n, 46022 Valencia, Spain
3
Department of Corporate Finance, University of Valencia, Avenida de los Naranjos, s/n, 46022 Valencia, Spain
*
Author to whom correspondence should be addressed.
Sustainability 2020, 12(23), 9827; https://doi.org/10.3390/su12239827
Received: 20 October 2020 / Revised: 20 November 2020 / Accepted: 22 November 2020 / Published: 24 November 2020
Crowdfunding is gaining popularity as a way of financing social sustainable initiatives. We performed a controlled economic experiment in MTurk by simulating a crowdfunding platform and developed a theoretical model that rationalizes herding behavior. The experiment was designed to test and quantify the causal effects of revealing specific information to prospective backers: (i) the number of early contributors already financing the project and (ii) positive opinions of other backers versus those of experts. The results show that early contributions to the campaign and positive opinions of peers act as a reinforcing signal to potential backers and affect backers’ beliefs about the probability of success, increasing contributions to the campaign. Furthermore, we show that herding is rational and set expectations on when we should observe rational herding and when not. The theoretical model captures the rational herding, which may be the main information aggregation path in reward-based crowdfunding platforms, and can help managers increase the likelihood of success in crowdfunding campaigns. View Full-Text
Keywords: crowdfunding experiments; consumer behavior; peer effects; rational herding; sharing economy; new management strategies; sustainable projects crowdfunding experiments; consumer behavior; peer effects; rational herding; sharing economy; new management strategies; sustainable projects
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MDPI and ACS Style

Comeig, I.; Mesa-Vázquez, E.; Sendra-Pons, P.; Urbano, A. Rational Herding in Reward-Based Crowdfunding: An MTurk Experiment. Sustainability 2020, 12, 9827. https://doi.org/10.3390/su12239827

AMA Style

Comeig I, Mesa-Vázquez E, Sendra-Pons P, Urbano A. Rational Herding in Reward-Based Crowdfunding: An MTurk Experiment. Sustainability. 2020; 12(23):9827. https://doi.org/10.3390/su12239827

Chicago/Turabian Style

Comeig, Irene, Ernesto Mesa-Vázquez, Pau Sendra-Pons, and Amparo Urbano. 2020. "Rational Herding in Reward-Based Crowdfunding: An MTurk Experiment" Sustainability 12, no. 23: 9827. https://doi.org/10.3390/su12239827

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